Crude oil futures closed higher last week, settling at $63.54, up almost $2.00, equivalent to 3.25% increase in prices compared to the week before. Early in the week, the market was pressured by a stronger U.S. Dollar which weakened foreign demand. However, oil prices reversed the earlier losses following the shutdown of the El Feel oilfield in Libya.

Additional support was provided by an unexpected fall of 1.6 million barrels in U.S. crude inventories, the week-ending February 16 which helped prices to jump higher, according to the data from the Energy Information Administration.

Fundamentally, prices are likely to remain firm at the start of the week due to the events in Libya. The market seems to be in balance because the effects of the OPEC-led production cuts are being offset by rising U.S. production.

In order to have a price forecast for the upcoming weeks, we are going to have crude’s chart technically analyzed in the following lines:

From the technical point of view, the main trend is up according to the weekly swing chart. However, the market has been consolidating since the multi-year top was reached the week-ending January 26. The trade through $66.39 was followed by a sharp correctional decline as it was the upper channel line area and also the 50% retracement Fibbo level from mid-2014 to early 2016 high to low.

The correctional move was stopped and reversed near $58, equivalent to 38.2% retracement of so-called Fibonacci. This zone overlapped the mid channel line which price has hovered in so far.

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Looking more precise to last week’s price action shows that price has successfully passed through and closed above 61.8% Fibonacci level of the total week’s decline, meaning that the short term resistance at $63.13 has turned to a primitive support which is required to be held valid to guarantee further rises in short term.

More technically, the hidden divergence visible in the MACD oscillator supports the continuation of the upward move to head toward the resistance at $66.39 top. Just in case this resistive zone is passed, the rally through $71 is quite assumable.

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To conclude, a sustained move over $63.13 will indicate the presence of buyers. Increased buying volume could generate the upside momentum needed to challenge the main top at $66.39.

Contrarily, a sustained move under $63.13 will signal the return of sellers. This could drive the market into the $62.15 equivalent to 50% retracement of last week’s hike as the first supportive zone.

Investors should bear in mind that any short term decline while the price holds above $58 should be translated as a correction in near term to gain momentum for breaking the recent top at $66.39 and a sustained break below $58 zone would accelerate losses towards the main support laid at $52.