The Oil Market is Focused on The OPEC Meeting
According to the research from Bloomberg, most market players believe that the OPEC’s daily output will be increased by 500,000 barrels. Most probably, the output increase may be proposed by Russia and Saudi Arabia. The major point here might be the necessity to compensate for the oil supply due to the decline in output in Iran and Venezuela.
In general, everything looks fine. Only if one takes a closer look at the matter, it can be seen that there is a third party, the USA. Earlier in May, there were speculations that the Americans and the Saudis had discussed the daily output increase “behind the scenes” – the number is believed to be 1 million barrels. High oil prices are not profitable for the USA right now as they require some particular balance, more expensive than 60$, but cheaper than 80$. These numbers would be perfect for American oil producers, so one can’t exclude a possibility of the oil lobby.
According to the latest data from the OPEC, outlooks for the second half of 2018 are quite cloudy. On one hand, there is a risk of the oil demand contraction in China and the USA, but on the other hand, there are reasons for the output increase in Saudi Arabia, Algeria, and other countries. The predicted oil demand for this year remains at 32.75M per day; the oil market is still experiencing the excess of supply.
On Wednesday, June 13th, a barrel of Brent costs 75.55$ and it is going down. The spread between WTI and Brent is decreasing: right now, it is 9$ against 11$ last week.
Analyzing the current movement of Brent, one can see that the price continues testing the support line of the mid-term rising channel. Despite incompletion of the reverse, the instrument has formed the descending structure. In this light, one may assume that the price is getting ready to break the long-term uptrend and start a new long-term decline. However, the current uptrend may yet continue. The resistance line for the current movement is at 77.00. After breaking this level, the instrument may be heading to reach 85.00.
The mid-term scenario for Brent is to move downwards inside the current channel. The first significant downside target will be the support line of the projected channel and 72.00. If the price breaks it, the instrument may continue falling towards the psychologically-crucial level at 70.00.
This article was written by Dmitriy Gurkovskiy, a Chief Analyst at RoboForex