Oil: Off 8-month lows on talk of OPEC output cut
|- Oil has recovered slightly from 8-month lows, possibly due to oversold conditions on intraday charts.
- Sell-off has likely stalled on talk of OPEC-led production cuts.
- Technicals remain biased toward the bears.
The sell-off in oil prices has likely stalled, possibly due to reports stating that Russia and Saudi Arabia have started discussions over possible curbs to output in 2019.
At press time, WTI is trading at $61.73 per barrel, having hit an eight-month low of $61.21 yesterday. Meanwhile, brent is changing hands at $$72.08 per barrel.
The slight recovery could be associated with the bullish divergence of the 4-hour chart relative strength index (RSI) and oversold conditions reported by the 14-day relative strength index.
Also, two OPEC sources said on Wednesday that OPEC and its allies may initiate output curbs next year to prevent the return of global oversupply.
While the selling has stalled, the immediate upside in prices could be limited as technical studies are still biased bearish. For instance, the 5-day and 10-day EMAs on WTI daily chart are trending south.
Further, the relentless rise in the US oil output could play spoilsport. The Energy Information Administration (EIA) data released on Wednesday showed that
the oil output hit a record 11.6 million barrels per day in the week ending Nov. 2.
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