Oil prices rebounded in New York after both yesterday’s 6% dive and fresh one-year low, shrugging off the Energy Information Administration report that showed a larger than expected increase in inventories. Crude stockpiles rose by 4.9 million barrels in the week ended November 16th, higher than the analysts’ estimate of 2 million, also marking nine consecutive weeks of gains, and the longest streak since March 2017.
Baker Hughes also reported a 3-rig decline to 1,079 for oil and gas in the US. The US oil rig count was also down 3 from 888 to 885. Recently the key drivers for lower cruder have been rising production and weakening demand. The Canadian dollar also climbed higher against the greenback, benefiting from the rebound in oil prices and stocks.
Earlier in New York, President Trump tweeted “Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!” Many oil analysts have credited the President into convincing Saudi Arabia to drive the oil market into oversupply.
The focus will now fall on the 175th OPEC meeting on December 6th. Expectations are for OPEC countries and allies, including Russia to join in on output cuts of 1 million to 1.4 million barrels per day. If they are unable to reach an agreement, we could see oil prices plummet. Even if an output cut is delivered, oil prices may have a short-lived rally as the focus will return back to weakening demand.
Price action on the 4-hour West Texas Intermediate chart displays a potential bullish ABCD pattern. Point D is targeted with the 161.8% Fibonacci expansion level of the B to C leg. If the bearish trend remains intact, we could see key resistance from the $66 .00 to $66.75 region.