Oil extends recovery but remains weighed by strong demand concerns
WTI oil extends strong rebound into second day, making an advance of over 8% in a less than two days.
Short covering ahead of the US presidential election lifted oil price, along with recovery in financial markets.
Fresh rally retraced over 50% of two-week fall from $41.86 to $33.61, but risk of recovery stall persists, as oil market is weighed by growing concerns of demand recovery slowdown, due to worsened situation with coronavirus pandemic, despite hints that OPEC+ group may extend its output restrictions into the first quarter of 2021.
Fresh bulls generated positive signal on return above falling 200DMA ($37.06), but momentum on daily chart remains deeply in the negative territory and continues to diverge from current price action, which lacks firmer support and is likely to be limited.
Bulls faced headwinds from falling 10DMA ($38.19) that guards key Fibo barrier at $38.71 (61.8% of $41.86/$33.61 descend), break of which is needed to confirm reversal.
The downside is expected to remain at risk while the price stays below 10DMA, while extension and close below 200DMA would signal bears are regaining control and shift near-term focus lower again.
Res: 38.19; 38.71; 38.98; 39.41
Sup: 37.06; 36.76; 36.55; 36.01