Crude Oil Surged, $52 Still Working as Strong Support But for How Long?
Dave Green • 2 min read
On Tuesday’s morning, the crude oil dropped below $52.40, which was Monday’s bottom, and recovered early losses by the marked highs of $53.50. The crude oil moved back and forth for some time and dropped down, providing a closing below $53. The market was supported by the weaker U.S. Dollar and the news that the world’s top producers cut output in January more than surprised traders as it was not what they had expected.
There is a history of mistrust between OPEC and Non-OPEC members, especially Russia, which is a giant Non-OPEC oil producer. Authenticated data must be issued to make sure the market can trust it.
According to some data so far, there are eleven OPEC members in the deal to cut output, which averaged 30.01 million barrels per day (bpd) in January versus 31.17 million in December.
Furthermore, interpretation of the data shows that OPEC achieved 82% compliance with its pledged production cuts. This was better than analysts had expected and indicates that OPEC and Non-OPEC members are complying with their promises to cut production in an effort to curb oil supply and increase prices to overcome their budget deficit.
Crude oil at a price of $52 is still acting as a strong support area, as mentioned earlier in yesterdays article. Oil prices continued to remain stable, as they have been for over a month now, since the implementation of the OPEC and Non-OPEC production cut deal that seem to be going ahead as planned so far.
Later today, U.S. crude oil inventories data is to be released. According to the API, U.S. crude oil inventories have been increased by 5.8 million barrels.
Let’s have a look at the Crude Oil 4-hr chart given below:
This is the Crude Oil 4-hr chart.
Biases remains upside till a production deal will be intact. It will be good if one waits for the crude oil inventories data release. Although under the 4-hr chart it’s a good time to go long, the uncertainty prevails before and after FOMC. I don’t prefer to trade under cautious or volatility session, so manage your risk/ reward.