Crude oil price for the WTI variant slumped during today’s New York session on the back of statements credited to the Russian oil minister on his country’s desire to delay discussions around output cut extensions.
Russia’s oil minister Alexander Valentinovich Novak crossed the newswires a short while ago, saying that his country would prefer a wait and see approach before committing to any further extensions in production cuts by OPEC. Russia had already been producing beyond the quota it had agreed with the oil cartel for quite some time now, and the latest comments may be a cause for worry in next week’s OPEC + meeting.
Russia leads the pack of non-OPEC oil producers who had entered into a production limitation agreement with the oil cartel in an attempt to shore up prices. Under the deal, Russia was to drop its production by 230,000 barrels from its October 2018 reference production levels of 11.421 million barrels per day. However, data from the Russian energy ministry indicates it has been exceeding this level for 7 months now.
The OPEC + meeting is widely expected to produce an agreement to extend the production cuts deal well beyond April 2020, but Russia’s latest actions may test the patience of countries such as OPEC leading producer Saudi Arabia, which has been producing even less than its assigned limitations to counterbalance the overproduction of some parties to the deal.
WTI crude oil price activity continues to be contained within the ascending channel on the daily chart, despite today’s slump from the 58.50 horizontal resistance level. WTI crude oil is currently trading at 56.28 and is fast heading to the channel’s trendline border where it is expected to meet some support.
A break below the channel’s lower border with a decisive 3% penetration close (or a successive double daily close) opens the door to 55.65 and possible the 54.20 price level where the neckline of June 2019’s double bottom is found. Below this level, the price area that formed the double bottom troughs (between $50.80 and $51.50) could become relevant as a support target.
On the flip side, a bounce from the channel’s lower border could force a retest of 58.51. Above this area, the channel’s upper border could come under challenge at the 60.75 price level (March 29 and July 12 highs). These price levels must all be taken out by some really positive fundamentals before 63.75 comes into focus.
Bias is presently bearish as this news adds to a slew of previously bearish fundamentals.More content