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Oil in focus today as OPEC and non-OPEC meet

Market Analysis

USOil, H1                  

Oil prices have started the week positively following Fridays sell off. The Organization of Oil Exporting Countries (OPEC) and other non- OPEC countries meet today in St Petersburg. All eyes will be on any sign of an increase in production cuts and any signs of the two OPEC countries that are excluded from the production deal (Libya and Nigeria) joining the agreement.  Reuters reported that there could be some sort of compromise where a conditional cap for Nigeria and Libya could be agreed, the Financial Times also reported that the Russian Energy Minister (Novak) said that they should cap output when their output “stabilizes”.   My own view is the emphasis on Nigeria and Libya is a something of a smoke screen and there is likely to be a slight rise in production cuts from both OPEC and non-OPEC countries with a view to maintaining the USD 45-50 barrel range for US Oil (with again the Saudi’s taking the loins share of the cuts).

The intra-day H1 chart shows resistance at the psychological $46.00 and $46.30 levels which is also the Fibonacci retracement levels from last week’s high at $47.75.  Minor support exists at $45.50 and lower at $45.00.  RSI remains weak at 33, but back over oversold areas and the parabolic SAR turned positive in early trades this morning.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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