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 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.
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.