Oil Bounces After the Dive Upon US Calling for Higher Production from OPEC+

Crude oil has been showing signs of weakness since the first week of June, when it peaked at $77. Buyers are still alive in crude oil, as today’s price action also showed, but they have lost the momentum, with the highs getting lower after every attempt to resume the bullish trend.

US WTI crude retreated to lows around $65last month, when OPEC+ decided to wind down on oil quotas and increase production in August. However, the 100 SMA (green) held as support on the daily chart, and US oil had bounced back up above $74 by the end of July.

Oil has continued to make lower highs since early June

In August though, sellers returned and pushed the price back down to the same support area, piercing below the 100 daily SMA as well this time, but the candlestick couldn’t close below it, which means that it wasn’t a proper break. Oil bounced back up after that, and we decided to open a sell forex signal, since the 20 SMA (gray) was acting as resistance on the H4 chart above.

But oil continued higher to $69. Yesterday we saw another dip in crude oil, as it dived from $69 to $66.70, after the White House called on OPEC+ to boost production, in an effort to combat rising gasoline prices. That sent US WTI crude down, but it reversed back up pretty quickly.

US Crude Oil Live Chart

WTI
This was a bit of an outsized reaction in my view because, let’s face the facts here! OPEC+ isn’t going to be listening to Biden when it comes to making these decisions. Sure, there are politics involved, including that outside of the oil policy, but no way is this a straightforward plea that will be taken at face value and agreed to by OPEC+ its camp. So, oil is back up, but it seems unable to push higher. Instead, it keeps making lower highs, which points down for oil, so we are holding onto our sell signal here.
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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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