Jeffrey Halley | Oct 11, 2017 10:15
OPEC comments unleash pent-up demand in oil overnight with WTI the main beneficiary.
Crude oil prices shot higher overnight, with WTI gaining a spectacular 2.80% and Brent a more modest, but still respectable, 1.55%. The gains left WTI comfortably above $50 a barrel closing at $50.80 in New York, while Brent regained the $56 level to close at $56.70. With the first of the crude inventory reports due tonight in the U.S. from the American Petroleum Institute (API) expected to show a resumption of the drawdowns in inventories, both contracts enter the later part of the week in a healthy state and seemingly poised for more gains.
The OPEC secretary general got the ball rolling, suggesting that world growth and Opec/Non-Opec compliance has the world oil markets rebalancing well under way. He also hinted that the grouping would take any means necessary to ensure this continues at the Nov. 30th meeting. A host of trading houses echoed this view, and Saudi Arabia announced better than expected compliance, cutting more than 0.5 million barrels a day in September.
Chatter that shale producers are struggling to raise production and dealing with increased costs probably accounted for the WTI outperformance overnight. A return of U.S. traders from Monday’s national holiday also helped.
Brent spot is unchanged at $56.75 this morning with resistance just above at 57.00 initially. A break opens a test of the double top at 57.40, which, in turn, clears the way for a retest of the 58.50/59.00 resistance zone. Support is at 55.80 and then the 55.00 area.
WTI’s march higher sees it trading at 50.85 in early Asia, its New York high. There is resistance at 51.00 followed by 51.40, which, if broken, clears the way for an advance on last week's high around 52.50. Support comes in at 49.20, the 200-day moving average, and then 48.80, the lows of Monday and Tuesday.
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.
Written By: Jeffrey Halley
Fusion Media will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading in financial markets, it is one of the riskiest investment forms possible. Currency trading on margin involves high risk, and is not suitable for all investors. Before deciding to trade foreign exchange or any other financial instrument you should carefully consider your investment objectives, level of experience, and risk appetite.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indices, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn't bear any responsibility for any trading losses you might incur as a result of using this data.