Not for the first time, since the land mark OPEC meeting at the end of November USOil stalls at the $54.00 resistance level. (I counted about 12 times). Today the contract is up for a third day, off the $53.58 high at $53.46, which stands as a net 0.9% advance on the day, extending the rebound from Wednesday’s three-week low at $51.22. Underpinning today is an IEA report finding that the OPEC-led production cut agreement among major oil producing nations reached 90% compliance in January, the first of the six-month plan to lift crude prices. In the bigger-picture view there is little evidence as yet to suggest that the broadly sideways chop around $53.00, which has been seen since early January, doesn’t remain in play. OPEC-led output trimming is being offset by unexpectedly large increase in crude stockpile data and rising shale production in the U.S. There have also been signs of softer China demand for crude. On the week, US Oil prices are showing a 0.7% decline, and on the year-to-date, a 0.5% abatement.
Technically, the robust channel between $51.50 and $54.00 offers good two way opportunities, consequently I have entered a SHORT position at $53.81 with an initial target 1 at the 20 period moving average at $52.80 and target 2 at the psychological $52.00 and 50 day moving average.
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