Oil continues to sizzle on the week with both WTI crude and Brent crude posting respective breakouts to the topside:
Technically, a strong weekly close above the resistance levels noted will allow for buyers to establish the next leg higher – perhaps even looking to $100 at some point. However, this week’s performance would mark six of seven weeks of solid gains for oil prices and that might allude to signs of things being a little stretched.
Adding to that is the fact that equities might also have something to say before the week is over and done with. US stocks are coming under quite some pressure and if that translates to a broader selloff and a major risk aversion wave, I fear oil could see a modest pullback from current levels.
So far on the week, oil buyers are defying any negative sentiment. But the charts are starting to tip over for US stocks and if it gets really ugly, I reckon oil surely won’t be able to shake off its risky asset trait and get stuck in.
As much as things are looking bullish for oil, this will be the big caveat to be mindful about in the next few days.