WTI continued trading higher on Monday and today during the Asian morning, it managed to emerge above the 30.50 (S1) line. Nevertheless, given that the price is still trading below the downtrend line taken from the 4th of December, I would consider the outlook to stay negative.
I would like to see a clear close above that trend line before I get confident on more bullish extensions. Taking a look at our oscillators, I see that the RSI continued higher and now looks ready to challenge its 70 line, while the MACD stands above both its zero and trigger lines.
These indicators support that WTI could continue north for a while, at least to test the aforementioned downside resistance line. On the daily chart, I see that WTI has been printing lower peaks and lower troughs since the 9th off October. Therefore, I would treat the recovery started on Thursday, or any extensions of it, as a corrective move for now.
• Support: 30.50 (S1), 29.50 (S2), 28.00 (S3)
• Resistance: 31.40 (R1), 32.40 (R2), 33.45 (R3)
Asian session – Trade with IRONFOREX
Oil prices jumped on surprise Saudi-Russian meeting Oil prices rose during the Asian session, on news that the energy ministers of Saudi Arabia and Russia are scheduled to meet in Qatar today to discuss oil production. OPEC delegates have stated in the past that Saudi Arabia would be willing to consider production cuts only if joined by other major non-OPEC producers.
The news sparked speculation of a potential agreement among the two nations to control production and added more fuel in the recent recovery of oil prices. OPEC officials have floated the idea of a production ‘freeze’ in recent days, which means that members will keep pumping their current levels of output.
This could stabilize the supply side of the energy market as overproduction was the main driver behind the plunge in oil prices. Iran remains the wild card in this outlook, as the country has repeatedly stated its intention to increase oil exports in order to recover its lost market share.
Nevertheless, any potential agreement between Saudi Arabia and Russia to regulate oil supply could bring a halt to the free fall of oil prices and could eventually cause a brief recovery, at least in the near term.
Mid-European Session –Trade with XM
Oil tumbles below $30, pound falls on UK inflation data.
There were some notable movements in the currency and oil markets this morning as economic data and news releases impacted prices.
Oil prices fell back down, dropping below $30 a barrel on news that major oil producing countries reached a deal to freeze output. A meeting of oil ministers from Saudi Arabia, Russia, Venezuela and Qatar early today in Doha concluded with a conditional agreement to freeze production at January levels.
Investors were disappointed as they expected more out of the meeting, such as production cuts, and so oil was sold. Prices on US oil futures touched as low as $29.54 after hitting as high as $31.46 earlier this morning.
The UK published inflation data today. While the headline annual figure showed inflation edged higher in January, the monthly and core numbers disappointed. CPI rose 0.3% on a yearly basis but fell 0.8% month-on month, more than forecast. Core CPI dropped 1.0% month-on-month and fell to 1.2% on a year-on-year basis.
The mixed data resulted in the pound dipping against the dollar to $1.4462 immediately after the release. Prices then headed another leg lower to a session low of $1.4443 before steadying. Earlier in the session sterling hit a high of $1.4515 after rising from the European session open of $1.4409.
Data out of Europe showed that German economic sentiment fell in February. The ZEW index came in at 52.3, missing expectations for a reading of 55 and was below January’s reading of 59.7. Concerns over the health of the global economy weighed on investor sentiment in Europe’s largest economy. Despite the data, the euro traded near the session highs against the dollar above $1.1180.
Focus now turns to US session data on the Empire State manufacturing index and the NAHB Housing Market Index
Crude Oil Forecast