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Oil Prices Look to Secure a Low at the Current Level

Crude oil prices could look to rally after a recent OPEC proposal to postpone oil production cuts. 

USOIL - Weekly Chart

USOIL – Weekly Chart 

A strong rally last week in oil has the price back above the $70 level and could mount a further rally. The first resistance level comes in around $75. 

The surge came after the weekly report from the Energy Information Administration (EIA) revealed that US stockpiles plunged to just 22.9 million barrels, the lowest level since 2007. Oil traders will now put their focus back on the latest forecasts from OPEC, which downwardly revised global Oil demand by 210,000 barrels per day. 

The Energy Information Administration (EIA) report said that stockpiles at Cushing, Oklahoma, plunged by the most since early September after a 1.3 million barrel drawdown. Lower imports from Canada likely added to the drawdown, Bloomberg reported.  

The OPEC+ alliance is looking at postponing planned production increases next year amid weak demand and competing production from non-allied countries that could keep oil prices stagnant through 2025 

Eight OPEC members had planned to restore 2.2 million barrels per day in previous production cuts from January 1. However, analysts now believe that they could delay these increases for another three months while monitoring demand. 

Prices have remained subdued after weak demand from China continued due to a weaker economy. A rally on stimulus measures faded as with other markets later this year. Global tensions continue to be a threat and could add to any rally if a low develops.

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.

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