IronFX: Commodities are trading higher today. The WTI finds buyers below the $50 handle despite a stronger US dollar. The uncertainty in the oil market persists ahead of the OPEC meeting due at the end of November in Vienna.
The one-to-one meetings among oil producers, before the big Vienna meeting, hint at the rising will to line up the production plans in order to keep oil prices at sustainable levels. This means a consolidation towards the $60 level by the end of the year.
Oil producers, themselves, remain heavily short on oil because they need to stay hedged against a potential drop in oil prices in case the efforts to pump up the prices fail. Oil producers’ short positions are at the highest levels since 2007, confirming the ongoing scepticism in this market.
WTI traded somewhat higher yesterday after it hit support near the psychological zone of 50.00 (S2). The price has been oscillating between that territory and the resistance hurdle of 52.00 (R2) since the 10th of October and as a result, I would consider the short-term outlook to be flat for now.
Our short-term oscillators lie near their equilibrium lines and point sideways, supporting my “wait and see” stance. On the downside, a dip below 50.00 (S2) could turn the short-term picture negative and perhaps initially aim for the 49.30 (S3) zone.
On the other hand, a break above 52.00 (R2) will confirm a forthcoming higher high and perhaps set the stage for the 54.00 (R3) zone.
As for the bigger picture, the break above the downside resistance line taken from the peak of the 9th of June has turned the medium-term outlook positive.
However, as I already noted, I would like to see a decisive break above the key resistance zone of 52.00 (R2), before I get confident on larger bullish extensions.
• Support: 50.45 (S1), 50.00 (S2), 49.30 (S3)
• Resistance: 51.15 (R1), 52.00 (R2), 54.00 (R3)