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Basic forecasts for crude oil: Bullish
Crude Oil Discussion Points
Oil remains in demand even though crude output in the United States hit a record high in February, and recent price developments have allowed higher targets to remain on the radar while the relative strength index (RSI ) flirts with the overbought territory.
Looking for a technical point of view on crude oil? Check Weekly Technical Forecast for Crude Oil.
It seems that the efforts to rebalance the Organization of Petroleum Exporting Countries (OPEC) and the allies will continue to bear fruit when crude reaches its highest level in December ($ 54.55), and the ongoing adjustment on the supply side will likely keep oil prices afloat, energy exports from Iran and Venezuela remain under the shock of US sanctions.
It remains to be seen whether OPEC and its allies will extend the six-month deal at the next meeting in April, in the wake of the mixed rhetoric of Russia, but the current economic situation could favor a more significant correction in crude prices given the slow growth rate of non-OPEC production.
New US Energy Update (EIA) Show US Crude OilWeekly field production reached a record 20,000 kb / d in the week ending Feb. 15, after being stable at 11,900 kb / d in the last four consecutive weeks. A further rise in US production may become a growing concern for OPEC and its allies, but so far the figures indicate a limited supply threat outside OPEC, signs of a stagnant supply to United States likely to establish constructive prospects for crude, especially the reverse formation of the head and shoulders seems to take shape.
At the same time, recent developments in the Relative Strength Index (RSI) suggest that the bullish momentum could accelerate as the indicator flirts with the overbought territory, a break above it. of 70 increasing the risk of rising oil prices while the oscillator continues to follow the upward trend postponed from late 2018. Sign up and join the DailyFX analyst David Song LIVE for an opportunity to discuss possible business configurations!
Daily chart CL1
Keep in mind, tWider outlook for crude remains constructive after breakout of December high ($ 54.55), with break / close above $ 57.40 (61.8% retracement) Fibonacci's opening overlap around $ 59.00 (61.8% retracement) to $ 59.70 (50% retracement). The next region of interest is around 62.70 USD (61.8% retracement) at 63.70 USD (38.2% retracement) followed by overlap of about 64.90 USD (100% expansion) at $ 65.90 (78.6% retracement).
However, the fact of not closing above $ 57.40 (61.8% retracement) can generate a short-term downturn, especially if the RSI fails to penetrate into overbought zone, with the first region of interest to come $ 55.10 (61.8% increase) to $ 55.60 (61.8% retracement) followed by $ 51.40 (50% retracement) to $ 52.10 (50% expansion).
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— Written by David Song, Currency Analyst
Follow me on Twitter @DavidJSong.
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