Oil prices have rebounded since March 27, trading above the short term 10 and 20 SMAs on the 4-hourly chart. The rally was helped by OPEC’s consideration of a 6-month output cut extension, and a noticeable drop in EIA crude oil inventories figure (the week ending March 24).
Although OPEC member states have executed the output cut effectively since the agreement was made in December. However, the drop in oil supply has been slower than expected, mainly because the US shale oil industry has been thriving helped by the rising oil prices. Saudi Arabia’s energy minister has warned that ‘no free ride’ for non-OPEC oil producer competitors.
OPEC will likely decide whether to extend the output cut in their scheduled meeting on May 25 in Vienna. It was reported on March 30 that Kuwait and some other OPEC member states support an extension of output cut, providing oil prices some support. At present, the supply remains high, whether OPEC will extend output cut is still vague.
The trend of spot WTI remains bullish, as it still trades above the short term SMAs. However, the current price is nearing the short-term major resistance level at 52.00. The selling pressure is heavy above the level. Be aware that the bullish momentum is likely to be restrained here.
Both the 4-hourly and the daily Stochastic Oscillators are above 80, suggesting a retracement.
Crude oil inventory (the week ending Mar 31) will be released at 15:30 BST today – always a major influencer in Oil price volatility. It will likely cause volatility for oil prices.
The resistance level is at 52.00, followed by 52.50 and 52.80.
The support line is at 51.50, followed by 51.00 and 50.50.