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Oil finally ended last week above the psychological level of $ 70 a barrel, following a bullish demand, including a 2.1 million barrel drop in US oil for the week ended September 14th. the week before and marks the fifth consecutive week of declines. The United States is not alone in taking advantage of crude stocks to meet robust global demand. Saudi Arabia pulled 5.5 million barrels of crude oil from storage in July, the largest reduction in eight months to cope with rising exports as output stagnates.
OPEC weekend meeting
This week, traders and analysts will review the results of the OPEC + meeting in Algeria this weekend. The members met to discuss the best way to implement the agreed production increase of 1 million barrels per day (mb / d) and to extend the agreement beyond its expiry date. end of the year. As always, the political record of OPEC members remains difficult, particularly for Iran, which faces new US oil export sanctions that will come into effect in November.
Iran has responded angrily to suggestions that OPEC could reduce the country's production quota, allowing other OPEC members to increase production to maintain the cartel's overall production targets. The Iranian oil minister has vowed not to attend the weekend meeting to protest what the country sees as an attempt by Saudi Arabia to take part in the Iranian oil market. Importers are already cutting Iranian oil purchases before the sanctions deadline, the country is losing about 900,000 barrels per day (b / d) of crude oil exports since April.
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Brent Oil at $ 80 a barrel
One of the main themes of the oil market is the disruption of Iranian exports by US sanctions, leading many analysts to anticipate a rise in oil prices until 2020. Last week, Saudi Arabia Saudi Arabia says it is comfortable with Brent oil at $ 80 a barrel. , suggesting that the Kingdom could be slow to replace lost Iranian barrels. One thing that could change this view, however, is the angry reaction of the United States. President Trump again tweeted last week his dissatisfaction with high oil prices and blamed the door of OPEC.
US Secretary of Energy Rick Perry has dismissed market fears over a possible oil shortage, arguing that Saudi Arabia, Russia and the United States could provide enough products to offset the loss of Iranian exports. The comfort comes as Russia announces that its oil production in August reached a record 11.21 mb / d after the Soviet Union, and Morgan Stanley expects the global oil and gas industry to increase its investments by 15% until 2020.
Improve the technical image
Oil managed to stay above the psychological level of $ 70 per barrel last week, but fell to just under $ 71.13, the Fibonacci retracement of 61.8% from early July to low of mid-August. Closing above this level opens the door for a new test of $ 75 per barrel. On Friday, oil amounted to $ 71.80 but was unable to consolidate these gains.
Other indicators are also in favor of bulls this week. The 21-day exponential moving average deviates from the 55-day average and the moving average divergence indicator (MACD) remains above the neutral line on the daily price chart. Oil also enters what traders call a Three Inside Up model on the weekly price chart. The model is a bullish reversal and occurs when the third candle closes above the second in a bullish bullish pattern.
The technical indicators are generally bullish on the daily price chart, with nine buy signals, no neutral signals and only one sell signal. Simple and exponential moving averages for all periods ranging from 5 days to 200 days are also upbeat with consistent purchase signals. The technical data on the weekly price chart of the longer lead times are even more optimistic, with no sales signals, eight buy signals and three neutral signals.
Traders are going this week to look for oil to consolidate last week's gains and prepare for a possible price revision test of $ 75 a barrel over the coming weeks and months.
Disclaimer: Gary Ashton is an oil and gas financial consultant who writes for Investopedia. The observations that he makes are his and are not meant to be investment or negotiation tips. Oil price chart courtesy of StockCharts.com.
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