Oil Price Fundamental Daily Forecast – Boosted by Support for OPEC Extensions

Crude oil had a volatile, two-sided session on Thursday, driven lower early in the day by concerns over U.S. production, but supported enough to trigger a rally in renewed confidence in OPEC’s ability to extend production cuts beyond the June deadline.

July West Texas Intermediate crude oil closed at $49.66, up $0.25 or +0.51%. August Brent crude oil settled at $52.67, up $0.23 or +0.44%.

Oil prices fell more than 1 percent earlier, as investors became increasingly cautious following the latest reports of links between Russia and the campaign to elect Donald Trump president. Prices fell sharply after Reuters reported that advisers to the president’s campaign last year had at least 18 undisclosed contacts with Russians. This rattled investor confidence in commodities.

The markets turned around as investor confidence rose, led by a rally in the equity markets. Also fueling the rally was a comment from an official of Russia’s largest oil producer, Rosneft. It’s chief executive Igor Sechin, told reporters in Berlin on Thursday that the company will meet its agreements with OPEC on oil output reductions.

Forecast

The fundamentals have been friendly for crude oil this week, but standing in the way of an even bigger rally has been a major retracement zone. We could see further upside action on Friday if the area is overcome.

In regards to the WTI contract, holding above $49.29 will indicate the presence of buyers. Overtaking $50.51 will indicate the buying is getting stronger.

The Brent contract is showing a similar pattern with support coming in at $52.26 and resistance, or a trigger point for an upside breakout, coming in at $53.41.

The combination of an extension of the OPEC/Non-OPEC production cuts and the sixth consecutive week of lower U.S. crude stocks is encouraging short-sellers to bail out of their positions at this time. General nervousness ahead of OPEC meeting on May 25, may lead to a continuation of the move.