The price of Crude Oil West Texas took roughly two and a half years to rally from the trough of $26 per barrel to the peak above $77 per barrel. Recently, Crude Oil West Texas entered a bear market and dropped more than 30% to lows near $50 per barrel in less than two months. The question for many investors and traders is whether a bottom has been reached or if it is still a falling knife.
On a fundamental level, oil markets have been buffeted by several factors such as the exceptions to US sanctions on Iranian oil, a lower forecast of global economic growth by the IMF, the oil output schedule of OPEC and Russia, or the US-China trade war that could negatively impact global manufacturing. Geopolitical factors may remain a major factor behind oil price movements and the G-20 meeting which starts on Friday could be a key catalyst.
From the angle of technical analysis, a potential inflection point could be around $50.00 per barrel on the daily chart. Firstly, the RSI is issuing an oversold signal. A bounce from this point could see an up move towards $56.40 per barrel (Fibonacci 23.6% retracement). If a rally is confirmed, the next level to watch could be at the key psychological level at $60.00 per barrel (Fibonacci 38.2% retracement). However, if $50 per barrel is breached, a downtrend could see a move towards $41.50 per barrel.