We could observe aggressive sales on the black gold market this week. The WTI crude oil futures have declined by more than 3.5%. The oil prices have stabilized a bit, but investors are waiting for some additional drivers.
The news background:
The OPEC meeting took place last week. The contract on cutting the oil production was prolonged to the end of the 2018 year. Nigeria and Libya also joined these countries. They and other oil producers agreed on reducing the production by 1.8 mln barrels per day. However, the black gold quotes didn’t react strongly, as this was already added to the prices.
The report of the U.S. Energy Information Administration showed the reduction of oil inventories by 5.6 mln barrels. The expectations of market participants were nearly the 3.4 mln barrels level. Concurrently, the black gold production in the US achieved its historic maximum. The indicator grew by 25000 barrels per day and got to the level of 9.7 mln barrels per day. The gasoline inventories grew by 6.8 mln barrels per day. Experts think that this dynamics will cut the crude oil demand.
The technical pattern:
Support levels: 55.90 USD, 55.00 USD
Resistance levels: 56.40 USD, 57.00 USD, 58.00 USD
The prices on the oil market are in the process of consolidation now. The key s&r levels are 55.90 and 56.40. The price is below 50 MA and 200 MA. The MACD histogram reached a positive zone and continues to rise. I advise you to open deals with a trailing stop from the key levels.
A correction may take place if the price consolidates above the 56.40 level. The target for taking profit is the 57.00 resistance level. The prices may move to 58.00-58.75.
Another option. The quotes may decline further if they fix below the 55.90 level. They may move to the 55.00 round level.