On Friday, crude oil (NYMEX:CLN14) gained 0.54% as ongoing worries over the potential of supply disruptions from Iraq continued to weigh on the price. As a result, light crude climbed above the resistance line, invalidating earlier breakdown. Will this bullish factor trigger further improvement in the short term?
As you know from our previous Oil Trading Alerts, the key factor that has driven the price of crude oil in recent days was the deteriorating situation in Iraq. Therefore, news that the conflict between Sunni Islamist insurgents and Iraqi army forces continued to push the commodity higher also on Friday.
Please note that although active oilfields remain far south from the insurgency, concerns about potential supply disruptions still support the price. Where crude oil head next? Let’s try to find the answer to this question on charts (charts courtesy of http://stockcharts.com).
Looking at the weekly chart, we see that although crude oil rebounded and came back above the black support rising line, the commodity still remains below the long-term declining resistance line. Therefore, we think that as long as light crude is trading in this narrow range another sizable move to the upside or downside is likely to be seen.