This weekend’s OPEC committee meeting is a key date for the diary and with prices poised for another leg higher let’s take a look at how we see the oil market as it stands.
Back in December we reported on Brent’s burst into the $52.5 - $54.3 resistance zone and soon after prices broke and importantly held above $54.3, representing a clear change in market structure. As we indicated in the article this paved the way for a subsequent rally and the resistance zone to turn to support.
However, 2017 has started with less of a bang. Dollar strength, rising shale production and scepticism regarding OPEC members following through with production cuts has seen oil prices retreat.
Following a sharp selloff last week, we saw prices form a new swing low within the $52.5 - $54.3 support zone. Confirmation of the swing low and prices rallying out of this price zone further reaffirms the integrity of this support level and led us at Faraday Research to take note.
With Mohammed Barkindo, OPEC’s Secretary General, yesterday stating that the oil market remains far away from its equilibrium level and OPEC’s own analysts forecasting the market won’t balance until well into 2017 without deeper cuts, the oil cartel is unlikely to rest on its laurels.
Yes, Saudi Arabia has questioned the need to extend the agreed production cuts beyond six months. However, Sunday’s OPEC meeting to discuss production guidance compliance could offer a clear catalyst for a new burst higher.
Any move to re-enforce the recent OPEC deal and increase ‘cut compliance’ would undoubtedly be a catalyst for a bullish burst. As we know, momentum bursts from key support levels are typically a clear indication that an uptrend is due; with this in mind it’s all eyes on Brent.
Interested in Oil technicals? Check out the key levels
This research is for informational purposes and should not be construed as personal advice. Trading any financial market involves risk. Trading on leverage involves risk of losses greater than deposits.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.