Watching Oil This Week As Saudi’s Promise Production Boost
Crude oil has had been very bullish during August and September, displaying some strong demand as Saudi Arabia pushed for higher prices by cutting production. But we saw a reversal at the end of September and it has been in freefall since then. WTI crude oil prices soared just above $95, then plummeted to $80 lows, printing a low of $81.60.
The USD dollar turned bearish by the middle of last week, but despite the US dollar’s retreat and another significant depletion in EIA inventories last week as the report released on Wednesday showed, falling by -2.2 million barrels versus a -446M estimate, the slide in Oil continued.
On Friday the price traded mostly sideways, but that looks bearish after most assets made decent gains against the USD. Over the weekend from what we heard, according to Summer Said of the Wall Street Journal, Saudi Arabia has notified the White House that it is prepared to increase oil output early next year if crude prices are high. This would be part of an agreement in which Saudi Arabia would recognize Israel and sign a military treaty with the US.
Last week, there were speculations of a Saudi deal that would involve US support for a Saudi civilian nuclear program as well as clearance for advanced weaponry sales to Saudis. That was mentioned as one of the causes for the bearish momentum in crude Oil.
On the weekly chart, we see that WTI crude bounced off the 200 SMA (purple) in July, which was acting as support but failed to make a clear break of the 100 SMA (green). A couple of doji/pin candlesticks formed in the last two weeks o September, which are bearish reversing signals and last week was followed by a major bearish signal. Oil was extremely overbought so it was time for a retrace lower, although this move might stretch all the way down to the 200 weekly SMA below $70.
US WTI Crude Oil Live Chart
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