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Oil markets converging as OPEC meeting looms

Market Analysis

USOil, Daily               

Oil prices are higher today, reversing some of yesterday’s decline that was seen following data showing a much bigger than expected rise in U.S. inventories, which added to signs of growing stockpiles elsewhere. A number of Opec members are meeting in Doha tomorrow (November 18) to lay the ground work on how to implement production cuts agreed on in the Algiers accord of September 29. The US Oil benchmark is presently showing a gain of 1.0%, at $46.20. Yesterday’s peak is at $46.41. US Oil is up 2.9% w/w, but is down by 8.6% m/m.  The large, near 6%, move on Tuesday broke the 50% Fib level from the August low at $39.22 and the October high at $51.90.

UK Oil is showing a similar move and the prices of the two majors are converging with UK Oil breaking $47.00 today as news breaks from Qatar that they are speaking with Iran and Iraq about freezing oil output at current levels.  The key date remains the end of the month November 30 meeting with all the members of OPEC meeting in Vienna.

Technically, there appears some more energy (excuse the pun) in the rise in Oil prices this week, triggered by the strong positive candle on Tuesday and a positive Parabolic SAR and RSI.  I entered a LONG position this morning in US oil at $46.20 with Target 1 at the 61.8 Golden Ratio Fibonacci level and 50 DMA around $47.13 and Target 2 at the 14 DATR at $47.85. The 50.00 Fibonacci provides short term support at $45.35 and then $45.20.

 

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Stuart Cowell

Market Analyst

HotForex

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