Oil Monthly Forecast – April 2018

The oil prices have been consolidating for most of the time in the month of March as the prices now seem to be in a region of liking for the bulls and the bears as well. The prices had been in a tearing hurry for the few months before that but now it seems to have settled down a bit and hence we are seeing this consolidation. In the upcoming month, we can safely say that this consolidation and ranging is likely to continue which should keep the prices range bound for much of the month.

Oil Prices in Range

The surge in the oil prices began towards the end of the last year as the OPEC and other producers confirmed that the oil production cut would continue for long and it began to become clear that they were serious in ensuring that the oil prices climbed to their target and that they would be willing to go to any extent to ensure the same. This began the oil price rise and we had pointed out at that time itself that the price region that the producers would be looking for would be around $60. The bulls managed to achieve this price region within a few months and even overshot their target to reach just beyond $65.

But since that time, though the producers have further extended their production cut till the end of the year, the oil prices have gone into a consolidation mode. The producers and the consumers seem to be happy with this price range and hence they seem to have come to a kind of truce and since that time, we have not been seeing any surge in the prices. Also, the prices have been a bit volatile but the direction has not been very clear and the prices have been choppy as well. This has made the trading difficult for the long term traders though the range traders seem to be generally happy with how the prices have been moving.

Though the prices have overshot the $60 region, this region is now acting as a strong support region and that is why we have been seeing some strong buying off this region. Any kind of a correction to the prices towards this region has been met with some strong buying and this has helped the prices to bounce back towards the $65 region and this is the main price action that we have been seeing in the oil markets over the last couple of months.

Consolidation Expected to Continue

Looking ahead to the month of April, we believe that the prices would continue to consolidate and range in this price region. This seems to be a comfortable place for all and hence the prices lack momentum in either direction and this is only going to continue in the short as well as the medium term as well. Therefore, we are quite confident that the prices would continue to bounce around this region and though there may be a bit of volatility brought about by the incoming data and the production data from the various parts of the globe, we believe that it is unlikely to have too much of an impact on the oil prices at this point of time.

With the producers also making it clear that the production cut would continue till the end of the year atleast, the supply seems to be under their control and with them controlling one large part of the market, the traders and the investors cannot expect this to change by too much in the short or medium term as well. It would be wise for the traders to wait till the prices reach support for them to go long in this market.