Crude oil futures inched higher on Monday on light volume and volatility due to a U.S. bank holiday. The charts indicate the market is essentially
Crude oil futures inched higher on Monday on light volume and volatility due to a U.S. bank holiday. The charts indicate the market is essentially rangebound with supporting coming from optimism connected to compliance with the OPEC/non-OPEC plan to cut production and resistance tied to worries over increased U.S. production.
U.S. March West Texas Intermediate Crude Oil futures closed at $53.43, up $0.28 or +0.53%. International March Brent Crude Oil finished at $55.88, up $0.43 or +0.78%.
I don’t expect much movement in either direction of the market this week due to the OPEC/non-OPEC meeting on January 21-22 in Vienna. At this meeting, the powers to be will be discussing compliance with the plan to cut out, trim supply and stabilize prices. We may get some hard numbers from the meeting which may give us some insight as to whether the plan to cut production is working, but we probably won’t know anything solid until the week-end.
We expect to continue to see positive reports this week from OPEC’s public relations team. This should prop up prices. For example, on Monday, Saudi Arabia said it would adhere strictly to its commitment to cut output under the global agreement to cut output.
“Many countries are actually going the extra mile and cutting beyond what they’ve committed … I am confident about the impact … and I am very encouraged about those first two weeks,” Saudi Energy Minister Khalid al-Falih said late on Monday at an industry event in Abu Dhabi.
And while OPEC’s people remain positive, there are others who believe the deal is flawed and ripe for failure. Some believe that production cuts, and resulting higher prices, would likely hit oil demand.
Some say the impact of higher prices is already being felt in China and India where demand is starting to moderate.
The cards are on the table with OPEC putting a positive spin on the news and U.S. analysts feeling otherwise. However, I don’t expect the markets to move much until after the hard numbers come out after the meeting in Vienna over the week-end.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.