WTI Crude Oil Price Dips Despite A Drop In OPEC Oil Production
WTI crude oil price CFDs steadily traded lower on Friday after opening at $51.07 despite reports that the Organization of Petroleum-Exporting Countries (OPEC) reduced production last month. By the end of the New York session, oil was down at $50.38.
According to the S&P Global Platts survey, OPEC’s oil production fell by 470,000 barrels per day in January to 29.08 million barrels per day compared to December. This was the first month that the cartel implemented production cuts. It should have been bullish for crude oil price because of the lower supply. However, a closer look at the report shows that Saudi Arabia bore the most cuts while other countries like Iraq and Nigeria continued to produce more than their quota. Consequently, this raised speculations that these reductions in oil supply may not be sustainable.
Crude Oil Price Outlook
On the 4-hour time frame, we can see that crude oil price has found its way back to $49.75. This price is relevant because it coincides with a broken falling trend line. In forex trading, it is not uncommon for broken resistance levels to turn into support (and vice versa). A strong bullish candle has already formed which may suggest that there are buyers in the market.
A closer look at the hourly chart, however, would reveal that crude oil price is on a short-term down trend. This is evidenced by the descending channel that becomes apparent when you connect the recent highs and lows beginning on February 6. Near-term resistance is around $50.70 where the top of the channel coincides with the 100 SMA. Reversal candles around this price could suggest that crude oil price still has room to trade lower to last week’s lows around $49.30. On the other hand, a strong bullish close above this price could mean that crude oil may soon rally to its February 6 highs above $52.00.