Crude oil             prices send corrective signals since late Friday. Last Thursday, Brent almost hit $78, its highest since November 2014. The bulls didn’t dare to challenge this psychological barrier which fuelled a partial profit taking at attractive levels. The question is whether the price has formed a top, or it’s just a pause before another bullish wave?
The recent rally was fuelled by concerns over Iranian oil             supply after Trump announced reimposing sanctions on the Islamic Republic. But now, it looks like the market has already priced in this factor, so it becomes more sensitive to the bad news from the US. According to Baker Hughes             , the number of oil             rigs increased by 10 to 844 last week, which is another highest level since March 2015. The continued rise in the drilling activity signals the US production will increase further down the road. Besides, concerns over tightening supply have eased somehow following the UAE energy ministry’s comments on enough capacity to mitigate any disruption in the oil             market amid the new US sanctions.
From the technical point of view, the oil             market looks overheated at this stage. Brent needs to regain the $77 figure – where the 20-DMA lies – in order to resume the ascent. Should the bulls fail to find enough impetus, the price will remain in the red and may threaten the $76 level, if the intermediate support at $76,50 gives up.