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Crude Oil Price Update – Major Pivot Price on Weekly Chart is $50.59

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By James Hyerczyk,

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U.S. West Texas Intermediate crude oil traded in a narrow range most of the week as traded shrugged off the weekly inventories data while waiting for a key OPEC and non-OPEC members meeting that would determine whether the current program to trim production would be extended or deepened.

November West Texas Intermediate crude oil futures settled the week at $50.66, up $0.22 or +0.44%.

As it turned out, the oil producing group reached no decision and may wait until January before deciding whether to extend their output curbs beyond the first quarter.

Russia’s energy minister said no decision was expected before January, although other ministers suggested such a decision could be taken before the end of this year.

“I believe that January is the earliest date when we can actually, credibly speak about the state of the market,” Russian Energy Minister Alexander Novak said. Other ministers suggested a decision could come this year.

In other news, oil services firm Baker Hughes reported that oil rigs operating in U.S. fields fell by 5 to a total of 744.

The fact that the OPEC and non-OPEC members failed to reach a decision wasn’t much of a surprise. Nonetheless, the market continued to be supported by stronger demand forecasts from OPEC and the International Energy Administration. Some bullish traders also believe the market is getting close to rebalancing.

Weekly Technical Analysis

The main trend is up according to the weekly swing chart. The trend turned up two weeks ago for the first time this year. If the upside momentum continues then look for a test of the next main top at $52.62. The main trend will turn back down on a trade through $46.14.

The main range is $58.37 to $42.80. Its retracement zone is $50.59 to $52.42. This zone was tested last week. This zone is very important to the longer-term structure of the market. Essentially, we are currently testing 50% for the year so a sustained move over $50.59 will be bullish and a sustained move under $50.59 will be bearish.

The short-term range is $46.14 to $51.11. Its retracement zone is $48.63. If buyers can’t overcome $50.59 then look for possible pullback into $48.63 to $48.04.

Weekly Forecast

Based on last week’s close at $50.66 and last week’s price action, the direction of the November WTI crude oil market this week is likely to be determined by trader reaction to the major 50% level at $50.59.

A sustained move over $50.59 will indicate the presence of buyers. This will also indicate that investors are willing to buy strength. This move could generate the upside momentum needed to challenge the major Fibonacci level at $52.42 and the main top at $52.62. Look for an acceleration to the upside if this top is taken out with conviction.

A sustained move under $50.59 will signal the presence of sellers. This will indicate that investors would rather buy a pullback into support instead of strength. If the selling pressure persists then look for a possible correction into $48.63 to $48.04. Since the main trend is up, buyers are likely to come in on a test of this zone.

This article was originally posted on FX Empire

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc

Crude Oil: Compliance to Production Cuts Reach New Highs

BARRON’S

Goldman Sachs reiterated its year-end Brent forecast of $58

per barrel on strong fundamentals.

Members of the Joint Organization of the Petroleum Exporting Countries or OPEC/Non-OPEC Ministerial Monitoring Committee met in Vienna Friday to review scenarios to be considered at future meetings, including its production cut agreement, which expires in March 2018.

oil energy rig
oil energy rig Illustration: Pixabay

The group will be considering extending cuts, but aren’t expected to make a specific recommendation.

Brent crude is up modestly so far Friday to around $56.32. United States Oil (USO) is down 0.34%.

Energy Select Sector SPDR ETF (XLE) is up 0.13%.

Goldman SachsDamien Courvalin, in a note published yesterday, wrote that the meeting will likely be focused on compliance. Compliance to production cuts reached new highs of 110% in August, which has helped ease inventory excess. Courvalin stayed his year-end Brent forecast of $58 per barrel based on “current strong fundamentals.” He says:

The progress made in the rebalancing suggests that it is in OPEC’s incentive to wait before committing to an extension of the cuts. In particular, we continue to view that while the decision to cut production to normalize inventories was rational, this strategy should be followed by a gradual increase in production to capture increasing market share and revenues in 2018. While too low a level of inventories would initially support prices with shale’s growing pains delaying its supply response, it would nonetheless incentivize more investments by other producers and would undermine OPEC’s goal of sustainably growing market share and revenues in our view.

Oil rises after Iraq signals possible OPEC cut extension

CNBC

  • Oil prices rose on Wednesday
  • OPEC was considering extending or deepening supply cuts, Iraq’s oil minister said
  • U.S. crude stocks rose last week, API said Tuesday

Oil worker in Iraq

Essam Al-Sudani | Reuters

Oil prices rose on Wednesday after Iraq’s oil minister said OPEC and other crude producers were considering extending or even deepening a supply cut to curb a global glut, while a report showed a smaller-than-expected increase in U.S. inventories.

U.S. West Texas Intermediate (WTI) crude futures were up 33 cents, or 0.7 percent, at $49.81 a barrel at 0419 GMT. Brent crude futures climbed 23 cents, or 0.4 percent, to $55.37.

While options being considered by the Organization of the Petroleum Exporting Countries and other producers include an extension of cuts in output by months, it is premature to decide on what to do beyond March, when the agreement expires, Iraqi oil minister Jabar al-Luaibi told an energy conference in the United Arab Emirates on Tuesday.

OPEC and producers including Russia have agreed to reduce output by about 1.8 million barrels per day until March 2018 in a bid to reduce global oil inventories and support prices.

Some producers think the pact should be extended for three or four months, others want an extension until the end of 2018, while some, including Ecuador and Iraq, think there should be another round of supply cuts, al-Luaibi said.

Why oil markets could turn volatile this week

Why oil markets could turn volatile this week  

But such moves are unlikely to have a big impact, said Georgi Slavov, head of research at commodities brokerage Marex Spectron.

“Demand is not great for crude oil and I don’t see how this will change any time soon. We do not see stronger demand for Q4 2017, which means supply needs to be controlled even more tightly,” Slavov told a briefing in Singapore.

“That won’t be easy as the productivity of oil rigs in the U.S. is expected to rise, so they can get more oil out of the same amount of rigs.”

Meanwhile, U.S. crude stocks rose last week while gasoline and distillate stocks decreased, data from industry group the American Petroleum Institute (API) showed on Tuesday.

Crude inventories rose by 1.4 million barrels in the week to Sept. 15 to 470.3 million, compared with expectations for an increase of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub rose by 422,000 barrels, API said.

Official figures on stockpiles and refinery runs will be released by the U.S. Department of Energy later on Wednesday.

US oil prices hit $50 on rising refinery demand, falling rig count

CNBC

  • U.S. Gulf refineries restarting after Hurricane Harvey
  • U.S. rig count falls to lowest since June
  • But analysts warn of distortions following hurricane damage

An oil pumpjack operates near Williston, North Dakota.

Andrew Cullen | Reuters
An oil pumpjack operates near Williston, North Dakota.

U.S. crude oil prices rose above $50 per barrel on Monday and were near last week’s multi-month highs as the number of U.S. rigs drilling for new production fell and refineries continued to restart after getting knocked out by Hurricane Harvey.

U.S. West Texas Intermediate (WTI) crude futures were trading up 41 cents, or 0.8 percent, at $50.30 by 0852 GMT, near the three-month high of $50.50 it reached last Thursday.

Brent crude futures, the benchmark for oil prices outside the United States, were at $55.91 a barrel, up 29 cents, and also not far from the near five-month high of $55.99 touched on Thursday.

“Demand forecasts from OPEC and IEA … continued to improve sentiment in the market. Refineries are also reporting a much better recovery from the recent hurricanes,” ANZ bank said on Monday.

Oil refineries across the Gulf of Mexico and the Caribbean were restarting after being shut due to hurricanes Harvey and Irma, which battered the region over the past three weeks.

Royal Dutch Shell’s Deer Park refinery in Texas was among the latest, beginning its restart on Sunday. The plant can process 325,700 barrels per day.

US oil rig counts down to 749 from a week ago

US oil rig counts down to 749 from a week ago  

The refinery restarts are occurring “as signs emerge of stalling growth in the U.S. shale industry. The number of rigs drilling for oil in the U.S. fell sharply last week,” ANZ said.

U.S. energy firms cut seven oil rigs in the week to Sept. 15, bringing the total to 749, the fewest since June, energy services company Baker Hughes said on Friday.

Despite these signs of a tightening market, analysts warned that distortions from the recent hurricanes made it hard to identify more long-lasting supply and demand fundamentals.

This week’s crude inventories data will almost certainly still show the distortions of Harvey and Irma and significant increases may be looked at by traders as outlier data,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.

Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to Sept. 12, the U.S. Commodity Futures Trading Commission reported on Friday.

Commerzbank said in a note on Monday that “speculative financial investors reduced their net long positions in WTI by 15,600 contracts,” warning that “because most of the latest price rise only happened after this, it is not yet reflected in the data.”

Crude Oil Forecast September 18, 2017, Technical Analysis

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WTI Crude Oil

The WTI Crude Oil market was very volatile during the Friday trading session, but continues to struggle near the $50 handle. At this point, it’s not until we close above there on a daily chart that I would be willing to buy this market, and I think a breakdown below the $49.25 level would be a sell signal. In the meantime, it’s likely that the market will be very choppy and difficult to navigate. I’m waiting for some type of impulsivity to get involved.

Brent

Brent markets rallied after initially going sideways on Friday, using the $55 level as support. Now that we have pulled back a bit, looks like the buyers are coming back in and perhaps we should go looking towards the $56 level. A break above there census market looking for $57.50. If we were to break down below the $55 level, the market should then go down to the $54 level after that. Expect volatility, that’s what we have seen for some time.