The oil market seems to have regained the attention it deserves during the past weeks, as WTI’s price managed to reach higher levels as a result of improved economic circumstances. In the past days, WTI’s price had corrected lower with traders still looking at entry points and fundamentals, trying to make decisions on how to benefit.
Our main focus in this report is to detail the latest Oil market data and fundamentals to provide a brief and informative outlook for traders. We will also focus on WTI’s price action through our technical analysis at the end.During the past weeks and according to the US Baker Hughes Oil rig count, active Oil rigs have now surpassed 300 with the latest figure last Friday being at 309.
The steady rise of active oil rigs provides evidence that demand for Oil has increased. However, on Tuesday we also received the API weekly crude Oil stockpiles figure that indicated a large surplus of 7.4M barrels. The API has not provided a number as large as that since July 21st 2020. Alike, the EIA in the past days also provided a large surplus of 21.6M barrels. A surplus of that size has not been seen in the past 5 years indicating that currently US Oil firms are holding a lot of inventory. In both cases, figures from the API and the EIA could be driving WTI’s price lower. This is also the price activity we have observed in the past days.
On a separate front, comments from OPEC’s Secretary General Mohammed Barkindo in the previous days, made headlines as the group continues to be very influential to the Oil world with its decisions.
OPEC’s secretary emphasized that the obstacles that were holding down the oil market in the past year are gradually weakening and that improving circumstances are supporting the outlook for the global oil market. Barkindo also stated that more caution is required at this stage, as even though vaccination is already carried out extensively in most countries, the virus continues to pose many threats.
The Oil market’s attention turns to today’s OPEC meeting were the team members will be discussing possible further actions taken on production levels, in the next months. Traders are expected to be very interested on the outcome of the meeting and they will be on the lookout for any changes made to the current OPEC strategy to keep production on the low. Caution is advised as the market reaction to headlines could move Oil prices significantly.
Some reports speculating on the outcome of the OPEC meeting see a possibility that OPEC+ producers might decide against increasing output. Even though it remains to be seen, with some parts of the world easing lockdown measures, more Oil maybe required thus demand could be on the rise.Finally, tensions in the Middle East seem to be ongoing, with some media sources claiming Saudi Aramco facilities seem to be a constant target. We would like traders to be mindful of any updates on the matter as the impact on Oil prices could be very considerable.
WTI has stabilized nearby the round price of $60 for the time being. It has been moving in a sideways motion between our (R1) 63.00 resistance level and our (S1) 59.00 support level since the 12th of February. Even though WTI’s upward trend line formed since the previous months has not been breached, the current sideways motion could be an indication of some stability from a technical perspective. In case a downward trend arises then the (S1) 59.00 support level could be revisited. If the selling is strong enough then the (S2) 57.50 barrier could become a lower target, while our lowest level for WTI at the moment is the (S3) 55.50 hurdle. Both the (S2) and the (S3) had been tested in the past month. In case of a bullish market for WTI’s price then the (R1) 63.00 resistance level could be a challenge for the buyers. Higher than that we note the (R2) 64.50 level and at the top the (R3) 66.50 line is also imminent. Please note the (R2) 64.50 level was last seen in January 2020, though the (R3) 66.50 line was last tested in 2019. The RSI indicator below our chart seems to be heading lower with some take profit arising in the most recent timeframes.