One of the most expected publications that influence the crude oil price is the World Oil Outlook (WOO). Published once a year by the OPEC (Organization of Petroleum Exporting Countries), WOO presents a forecast for the oil market for the period ahead, while considering the changes in the industry that took place in the current year.
This year the WOO report is of particular importance for several reasons. First, the price of oil dropped this year below zero for the first time in history. In April, the WTI futures contract for May settled at -$40, in an unprecedented drop. Second, the supply and demand levels are severely disrupted by the COVID-19 pandemic. Therefore, any forecast published on the 2019 WOO edition was invalidated.
Is This Why the Crude Oil Price Does Not Move?
Many voices within the industry have wondered why the crude oil price did not move for the entire summer. Truth be told, crude oil has only consolidated around the $40 level, which became pivotal.
One perfectly plausible argument is that the crude oil price waits for the 2020 WOO report from OPEC. Another one is that the recent bounce we have seen this week is caused by what insiders have seen on the report. It should be noted that media and analysts may require an embargoed copy from OPEC, two days ahead of the official release.
Crude Oil Price Technical Analysis
The technical perspective on crude oil looks constructive, despite the recent weakness so far in the trading day. In fact, the price reacted to dynamic resistance given by previous support.
What is interesting is that the resistance is the neckline of an inversed head and shoulders pattern. Moreover, this pattern did not form at the end of a bearish trend, but at the end of a horizontal consolidation, which further reinforces the bullish case.
Bulls have three possibilities to go long. One is at the market, another one at half the channel’s distance and another one at the dynamic resistance. Ideally, the weights for the entries are calibrated in such a way that the first entry is the biggest one. The invalidation comes at $37.50, but the take profit given by the measured move exceeds $44.5.
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Crude Oil Price Short-Term Forecast
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