The recent pace of strong gains in the WTI crude oil market is seen to be slowing with prices likely to close flat for a second consecutive day. This could potentially see the onset of a short term correction in the markets.
The initial support level near 57.35 is likely to be tested in the short term. As long as this support level holds, we could expect crude oil prices to maintain the upside bias.
However, in the event that oil prices lose the 57.35 support, then we might expect to see a steeper correction. Below this level, the next main support comes in near 53.77.
Given the recent bullish momentum in the oil markets, there is also strong evidence of a bearish divergence building up.
Therefore, this could see a short-term correction which can only be confirmed upon a daily close below the 57.35 support level.