All Blogs / Analytics & Forecasts

WTI: it's too early to talk about the turnaround of the bear market

13 November 2018, 14:34

TifiaFX

After the representatives of Saudi Arabia announced last weekend that in December the kingdom would unilaterally reduce oil exports, on Monday, oil prices rose, opening the trading day with a gap up.

However, by the end of the trading day on Monday, prices dropped again, closing the trading day in negative territory.

Oil prices fell after US President Donald Trump wrote in his Twitter account that he hoped that Saudi Arabia and OPEC would refuse to reduce oil production. In his opinion, oil prices should be significantly lower.

WTI oil prices have lost almost 25% over the last month, demonstrating the longest period of decline since the start of futures trading on this sort of oil in 1983.

Oil reserves in the United States exceed 420 million barrels. Last Wednesday, the US Department of Energy published weekly data, which indicated another increase in US oil reserves of +5.78 million barrels of oil compared to +3.22 and +6.35 two and three weeks earlier.

At the same time, the number of active oil drilling rigs in the USA rose again last week to 886 units, compared to 874, 869, 861 units earlier.

However, in recent months, oil reserves are close to the average 5-year values. It is unlikely that OPEC will decide to reduce production volumes. The next meeting of OPEC on this issue will be held in December.

A further drop in oil prices is likely, both against the background of a stronger dollar and rising US oil reserves. The volatility of global stock markets, which turned out to be in negative territory below key resistance levels, also creates prerequisites for a further decline in demand for oil.

On Thursday (15:30 GMT), the weekly report of the Energy Information Administration of the US Department of Energy on oil and petroleum products in the country’s storage facilities will be published.

The previous value of +5.78 million barrels of oil and petroleum products. If the reserves of oil and oil products in the United States rose again last week, then this will negatively affect oil prices.

*)An advanced fundamental analysis is available on the Tifia Forex Broker website at tifia.com/analytics

Support and Resistance Levels

Below the key resistance level of 66.00 (EMA200 on the daily chart) negative dynamics prevail.

The breakdown of support levels of 57.80 (Fibonacci level 38.2% of the correction to the growth wave that began in February 2016 from the support level near the 27.30 mark), 57.20 (ЕМА200 on the weekly chart) can return the prices for WTI oil to the global bearish trend.

Support Levels: 57.80, 57.20

Resistance Levels: 61.30, 62.80, 64.00, 65.00, 66.00