(08 APRIL 2019)DAILY MARKET BRIEF 2:Oil prices will maintain the pace
A rebound in US employment figures, ongoing sanctions in Iran, Venezuela and now war escalation in Libya without mentioning OPEC’s production cut and improving Sino-American trade discussions remain the major factors for current lift in oil prices. Despite an acceleration in US oil production, it seems that oil bulls are taking the hand.
Indeed, EIA Crude oil inventories for the week ended 29 March rose by 7.3 million barrels while Baker Hughes weekly oil and gas drilling rigs rig count figures for the US suggest a rise of 15 (+22 from last year), suggesting that production in the US is recovering following US shale production disruption in February. Yet, it appears that OPEC’s Group of 14 still has the last word on oil prices, whose recovery phase started in December 2018 following OPEC meeting, sustains. OPEC’s 4th output cut (-295’000 bpd in March; revised from -560’000 bpd to -380’000 in February) stays consistent and it is expected to maintain current pledge until end-June 2019 assessment. The boost of oil prices is therefore expected to keep up, as major resistance from October 2018 remains while a potential boost is conceivable in the event of a positive trade agreement between the US and China. Still risk of a potential NOPEC bill needs to be monitored carefully. WTI, Brent Crude and Shanghai Crude are trading 39.80%, 35.40% and 24.30% year-to-date.
Currently trading at 63.36, WTI is heading along 63.70 short-term. Major resistance at 76.41 (03/10/2018 high) remains.
