- WTI runs to key resistance on high hopes of an OPEC+ accord to cut supply.
- Saudis may have their work cut out in achieving an accord to cut supply.
West Texas Intermediate crude is off from its recent highs at $54.78 having risen from 1.76% to a high of $54.78 sitting around $54.38 currently. As for futures, West Texas Intermediate crude for November delivery added 84 cents, or 1.6%, at $54.15 a barrel on the New York Mercantile Exchange, after falling 0.9% on Monday.
Results of the Candian elections were in earlier and Trudeau will be PM for another run with a minority government – The Canadian Dollar, linked to oil price fluctuations, firmed in its own right, also garnering support from a healthy Bank of Canada Business Outlook Survey. However, the key headlines for Oil stem from sentiment surrounding the forthcoming meeting in December this year between members of the Organization of the Petroleum Exporting Countries and its allies who will consider making deeper reductions to crude output.
OPEC+ could start considering scenarios for deeper cuts
Reuters reported that "two sources from OPEC and non-OPEC producers said that next month the JTC committee, which monitors compliance with the pact, could start considering scenarios for deeper cuts and make its recommendations to the OPEC+ meeting for debate in December." Indeed, as we have traded the theme for a while now, demand-side concerns have been factors into the price of oil which has been unable to get over the gain line so to speak, with both the smart money/fund managers and speculators increasing their short positions in the face of a deteriorating global economic backdrop.
"Global demand for OPEC crude will average 29.6 million bpd, OPEC said in its latest monthly oil market report, a drop of 1.2 million bpd from 2019," Reuters reported, noting, "this could press the case for further supply restraint in 2020, another source said – “But it is not just about the numbers. Any decision to cut is also a political one,” that source said.
Analysts at TD Securities, however, highlight a risk that the Saudis may have their work cut out in achieving an accord to cut supply – "Thus far in 2019, tanker war fears, supply disruptions (both structural and temporary) and boiling geopolitical tensions have failed to lift crude prices. And, in this context, we remain concerned that the Saudis may have a hard time convincing other OPEC+ members to deepen their cuts when they meet in December."
WIT levels
WTI has rallied to test the October resistance just shy of the 55 the figure. Technically, a rejection here could be catastrophic for the bulls and there is still plenty of time for the bears to firm their grip ahead of the OPEC meeting in December - a week let alone two months is a long time in trading the black gold.
However, a breach of the 55 handle will open risk towards the 55 handle and the 200-day moving average where it collides with a 38.2% Fibonacci retracement level. Meanwhile, below the said resistance, bears can look for a break below the 21-DMA around 53.70 then the 50 handle which opens prospects for the Nov 2018 lows at 49.39 again. The 46.90 level ahead of the 18th Dec lows down at 45.77 will then be in focus.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD keeps range above 1.0800 after German Retail Sales data
EUR/USD struggles to gain traction and continues to move in a tight channel slightly above 1.0800. The data from Germany showed that Retail Sales declined by 1.9% on a monthly basis in February, making it difficult for the Euro to attract buyers.
GBP/USD stays depressed below 1.2650 amid market caution
GBP/USD remains defensive below 1.2650 in European trading on Thursday. The hawkish tone from Fed Governor Christopher Waller keeps the US Dollar afloat amid a cautious trading environment ahead of key US data releases and the Good Friday trading lull.
Gold eyes daily close above $2,200 for a sustained uptrend
Gold price is duplicating the move seen in Wednesday’s Asian trading, as it edges lower below $2,200 early Wednesday. Gold capitalizes on sustained US Dollar strength and a rebounding US Treasury bond yields struggle, as traders take account of the latest hawkish US Fed commentary.
XRP ruling by Judge Torres denied in Coinbase lawsuit, yet another blow to Ripple
XRP programmatic sales ruling by Judge Torres completely rejected by US Court in Coinbase lawsuit. US Court rejected Coinbase’ motion to dismiss SEC lawsuit, weighing heavily on Ripple’s legal battle.
The other terminal rate: How far will policy rates be cut?
Recent communication by the Federal Reserve and the ECB has made it clear that the first cut in official interest rates is coming. Both central banks are saying the same but the ECB communication is more opaque than that of the Fed.