Crude Oil Price to Decline Further Towards $55.00?

Key Highlights

• Crude oil price struggled to move above the $58.00-59.00 levels and moved down against the US dollar.
• There was a break below a major bullish trend line with support at $57.40 on the 4-hours chart of XTI/USD.
• The US Services PMI in Nov 2017 decreased from the preliminary reading of 54.7 to 54.5.
• Today, the US ADP Employment Change will be released for Nov 2017, which is forecasted to post a change of 185K, less than the last 235K.

Crude Oil Price Technical Analysis

Crude oil price gained heavily in November 2017 and moved above $58.00 against the US dollar. However, the price struggled during the start of December 2017 and is currently under bearish pressure.Looking at the 4-hours chart of XTI/USD, the price clearly failed to move above $59.00. There were two rejections near $58.80 and the price recently moved below the 61.8% Fib retracement level of the last wave from the $56.64 low to $58.77 high.Moreover, there was a break below a major bullish trend line with supports at $57.40 on the same chart. At the moment, the price is holding the 100 simple moving average (red, 4-hour), but remains at a risk of more declines towards $55.00 in the near term.The next major support on the downside is around $55.50 and the 200 simple moving average (green, 4-hour). On the upside, resistances are at $57.80, $58.00 and the all-important $58.80.

US Services PMI

Recently in the US, the Services Purchasing Managers Index (PMI) for Nov 2017 was released by Markit Economics. The forecast was slated for a rise from the preliminary reading of 54.7 to 55.4.However, the actual result was on the lower side as there was a decline in the US Services PMI to 54.5, down from October’s reading of 55.3. Moreover, the HIS Markit U.S. Composite PMI™ Output Index declined from October’s reading of 55.2 to 54.5.Commenting on the report, the Chief Business Economist at IHS Markit, Chris Williamson, stated:

The slowest growth of services sector business activity since June, alongside a slight dip in the pace of manufacturing expansion, means the November PMI surveys registered a modest cooling in the overall rate of business growth. Mid-way through the fourth quarter, the surveys are still pointing to a reasonable GDP growth rate of approximately 2.5%.

Overall, the result was a bit less than the market forecast, which helped Crude oil price is staying above $57.00.

Economic Releases to Watch Today

• US ADP Employment Change Nov 2017 - Forecast 185K, versus 235K previous.
• BoC Interest Rate Decision – Forecast 1.00%, versus 1.00% previous.