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Crude Oil: Shy signs of recovery

Global markets have been shaken by fears of a slowdown in the Chinese economy, worries that dragged the oil prices lower for eight sessions in a row.

But sentiment has improved amid an interest rate cut in China and upgraded second quarter growth in the US. China’s Shanghai Composite Index rose again overnight and the price of a barrel of crude oil has now picked up.

Hard-hit Venezuela has been contacting other Organization of the Petroleum Exporting Countries (OPEC) members to push for an emergency meeting in coordination with Russia to come up with a strategy to stop the current oil price collapse.

OPEC delegates see little chance of the exporting group diverting from its policy of defending market share, although the latest drop in prices is starting to sour the business mood even in Saudi Arabia. But OPEC doesn’t meet until December 4 and has rejected previous calls for an emergency meeting.

Since the beginning of the year oil prices fell more than 14.0% and making a new low for the year at 37.74 last Friday. Last week crude oil initially fell but found enough buying pressure to turn around and close in the green near the high of the week, creating a bullish engulfing pattern. The commodity is still in a well establish bearish phase and the stochastic is showing an oversold market setting higher lows and price is making lower lows, signs that the downside may begin to get exhausted.

Expecting an upward move to a key level at 54.42 on a break above a weekly resistance at 47.78 (scenario 1).

LCrude is a CFD written over Light Crude futures.