Oil Bulls Run Free On Fears of OPEC Production Cuts

Catogory : Market Report

WTI jumped higher in the US session, setting new 2019 highs, strengthened by fears of OPEC led supply cuts. Also, oil prices may have gotten a further boost, as political instability rises in Nigeria and Venezuela and at the same time US sanctions against Iran continue to trim the oil supply chain. Sources point out that although there is no lack of resources, access to them gets more and more difficult. On the flip side, a soaring US oil production puts the breaks on oil prices, as it has reached a record high level of 11.9 million bpd. Another factor withholding oil prices is the global economic slowdown, with special focus on China, which could weaken demand for oil. The release of API weekly crude oil inventories last night, showed an injection of 1.26 million barrels and gave oil prices a small boost, as the figure was expected to be around 3m. We could see volatility for oil continuing today, especially as the official EIA crude oil inventories figure is due out. WTI prices rose for another session, yesterday testing the 57.55 (R1) resistance line. The commodity’s prices may continue their bullish run in the next few days, as long as the upward trend line incepted since the 11th of February remains intact. We would like to advise caution as some volatility is expected to occur at the release of the EIA crude oil inventories later today. Also note that the RSI indicator in the 4 hour chart is above the reading of 70, implying a rather overcrowded long position for the commodity. Should oil find fresh buying orders along its path, we could see it breaking the 57.55 (R1) resistance line and aim for the 59.00 (R2) resistance level. Is on the other hand the pair comes under the selling interest of the market, we could see it aiming if not breaking the 55.60 (S1) support line.