OPEC’s Rubber Stamp Leaves Oil Lukewarm

OPEC’s summit passes without incident as the production cut extension was rubber-stamped and Libya and Nigeria are brought into the fold.

The oil market breathed a sigh of relief as the OPEC/Non-OPEC meeting passed without incident with the grouping doing precisely what the street had priced in, extending the production cut agreement nine months to cover all of 2018. The additional positive news was that Libya and Nigeria were both bought into the fold, but markets barely reacted with Brent and WTI both closing the session unchanged from the day before.

With prices flatlining on a closing basis and neither contract able to even remotely test their November highs, attention may well turn to positioning fatigue. The danger is that traders will look to square up long positioning into the weekend, setting in motion a corrective sell-off.

Brent

Brent crude opened at 63.15 and had climbed 40 cents to 57.55 in early Europe having failed ahead of 64.00 overnight. It now has several layers of daily double tops at 64.00 initially, followed by 64.45 and 64.85.  It must chew through all of these levels to reignite the rally. Supports lies at 62.00 followed by the two-month trendline at 61.60 and then 61.25 multiple daily lows.

Brent Crude Daily

WTI

WTI was comatose at 57.35 in Asia before climbing 40  cents to 57.70 in Europe. It has resistance at 58.15 and then the two-year high and daily double top at 58.85. The downside looks more worrying, its two-month trendline support very near to current levels, at 57.00 this morning. A break sets up a drop to 56.00 and then 55.00.

All in all, with momentum waning on both contracts, and a read between the lines suggesting both Saudi Arabia and Russia feel Brent is approaching is pricing sweet spot at these levels; the danger could be a move lower from here into next week.

WTI Daily

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Currency Analyst
Based in Singapore, Jeffrey has over 25 years experience in the financial markets, having traded currencies, options, precious metals and futures. Jeffrey started his career at Barclays Bank in New Zealand. However he has spent most of it in London and Asia.Jeffrey focuses on the Asia time zone across asset classes. A regular commentator on business news TV and Radio, he is originally from New Zealand and holds an MBA from Cass Business School, London.
Jeffrey Halley

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