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December 12, 2019
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Forex

Crude Oil Price Outlook Takes a Blow on Russia OPEC Cut Comment

CRUDE OIL PRICE OUTLOOK SOURS AFTER RUSSIA SHIES AWAY FROM FURTHER OPEC SUPPLY CUTS

  • Crude oil costs are coming below strain throughout Tuesday buying and selling after feedback from Russia’s vitality minister forged doubt on curbing oil manufacturing additional with OPEC subsequent month
  • The worth of crude has breached a key technical degree and will proceed to slip amid lingering US-China commerce speak uncertainty
  • Check out these Top Crude Oil Trading Strategies & Tips

The worth of oil is taking a nosedive because the US buying and selling session comes on-line with the commodity on tempo to drop over 1.5%. I famous earlier this month that crude oil costs regarded primed for a reversal after I detailed how crude oil charts have been approaching key resistance ranges whereas oil fundamentals have been displaying indicators of potential deterioration. Crude oil bulls are actually attempting to stymie the selloff and cling onto its rising assist line close to 55.75 after a laborious rejection on the 58.00 deal with. Though the most recent headlines out of Russia – a member of OPEC+ and a nation that produces 11% of the worldwide oil provide – presents a bearish headwind for crude oil worth outlook.

Specifically, a Reuters report said that Russia is unlikely to deepen oil manufacturing cuts if requested by OPEC on the oil cartel’s upcoming summit in Vienna on December 05. However, the report talked about that Russia would probably agree to increase current oil provide cuts OPEC+ agreed to earlier this 12 months in goals of rebalancing the oil market amid ebbing demand for petrol attributable to slowing international GDP progress pushed primarily by ongoing US-China commerce battle uncertainty.

CRUDE OIL PRICE CHART: DAILY TIME FRAME (JANUARY 30, 2019 TO NOVEMBER 19, 2019)

Chart created by @RichDvorakFX with TradingView

Crude oil costs are presently probing the assist trendline that connects the collection of upper lows recorded since early October. This follows a breach of confluent assist supplied by the 38.2% Fibonacci retracement degree of the commodity’s bearish stretch from April 23 to June 05, which got here subsequent to a sharp reversal on the 200-day easy transferring common. The worth of crude oil may face additional promoting strain within the close to future as technicals weaken and bearish momentum features tempo as steered by the MACD indicator. If assist supplied by the ascending trendline fails to maintain crude oil costs buoyed, the 50-DMA close to 55.50 comes into focus as the following potential degree of protection.

CRUDE OIL PRICE CHART: Four-HOUR TIME FRAME (SEPTEMBER 25, 2019 TO NOVEMBER 19, 2019)

Crude Oil Price Chart Outlook Technical Analysis

Chart created by @RichDvorakFX with TradingView

While the abrupt reversal in crude oil is worrisome, technical assist with potential of thwarting the continuing selloff is plentiful. Most notable is the 55.75 worth degree highlighted by the November 08 intraday swing low. Slightly beneath this space is the zone of confluence underpinned by the 38.2% Fibonacci retracement of crude oil’s buying and selling vary because the October 03 low, which can additionally hold the worth of crude oil afloat. Below this space, nonetheless, promoting strain has potential to speed up rapidly and goal the 54.00 deal with.

CHART OF CRUDE OIL & IG CLIENT SENTIMENT INDEX: DAILY TIME FRAME (JULY 07, 2019 TO NOVEMBER 19, 2019)

Crude Oil Price Chart Outlook Technical Analysis

Also noteworthy is the most recent change in dealer positioning detailed within the IG Client Sentiment Report. In reality, 61.96% of retail crude oil merchants are net-long the commodity leading to a long-to-short ratio of 1.63 to 1. Moreover, the variety of merchants net-long is 31.34% larger than yesterday and 25.61% larger relative to final week whereas the variety of merchants net-short is 26.40% decrease than yesterday and 13.06% decrease relative to final week. As such, the latest modifications in retail dealer positioning suggests a stronger bearish contrarian buying and selling bias.

— Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market perception

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