Oil Price Analysis: WTI meets bids once again at the psychological $40 support level

• Spot WTI trades 0.41% higher on Monday.
• Egyptian Parliament authorises its military to intervene in Libya.

WTI 4-hour chart

WTI has popped back up on Monday after some early session weakness. The spot contract is now trading just under USD 41 per barrel after the Egyptian Parliament authorised its military to intervene in Libya. This could, of course, disrupt some supply in the area but if the tensions escalate lead to even more issues and output problems. 

The inventory levels in the US have been coming off as last week both DoE and API levels decreased. The cap in prices might come as the OPEC+ group start to come out of their output cut agreement and cause what is known as a "taper tantrum". This is when supply is added back into the market which could cause the price to fall. There is no doubt that the continuing issues that the COVID-19 pandemic has on travel and global trade are an issue for oil consumption but at the moment the price seems stable near USD 40 per barrel. 

Looking closer at the chart, the price met some strong buying pressure at the psychological USD 40 per barrel level. The next resistance could come at the previous wave high of USD 40.82 per barrel. If it does now and the wave low of USD 39.29 per barrel gets broken it would make a lower high lower low pattern and the support zones could be tested. There is also the red trendline support close by which has also been used to good effect in the past. A break of the trendline could be an important price signal that lower levels are ahead. The main high on the chart is at USD 41.61 per barrel if this does get broken then its game on for the uptrend.

Additional levels