Oil price rises on expectations of OPEC’s deeper production cut
WTI oil holds firm tone on Thursday, following 3.3% advance on Wednesday, with strong bullish sentiment being boosted by much bigger than expected drop in weekly crude inventories (-4.85mln bls vs -1.73 mln bls f/c) and expectations that OPEC+ group would increase production cut.
The WTI contract hit new 2 ½ month high on break above pivotal Fibo barrier at $58.46 (61.8% of $63.12/$50.91), which so far capped attack five times.
Fresh optimism on expectations that OPEC will agree to increase output cut on cartel’s meeting today, lifted oil prices.
The meeting of expanded group, known as OPEC+ is scheduled on Friday and Saudi Arabia, the group’s leader, offered conditions to OPEC+ members to comply with existing agreement (which they so far consistently failed to implement) and Saudi will proceed with new plan to further reduce production and tighten oil market.
Strong bullish sentiment is expected further support oil price, with eventual close above $58.46 pivot, needed to generate bullish signal for continuation of two-month uptrend from $50.91 (3 Oct low).
Daily indicators turned to full bullish setup and support the action, but weaker momentum warns that bulls may face headwinds.
Failure to close above $58.46 Fibo barrier would soften near-term tone and keep the downside vulnerable.
Markets will carefully watch Friday’s OPEC+ meeting for fresh direction signal on the outcome of the meeting.
Res: 59.03; 59.22; 59.43; 60.00
Sup: 58.46; 58.03; 57.57; 57.28