US Crude prices jump above $50 for the first time in 2019 on improved sentiments between US-China trade war talks & OPEC Cuts. There are hopes that authorities of the US & China can resolve a trade dispute between the two biggest economies. Also, statements are coming from US official on China trade talks and it looks like everything is going as per expectation. If this trade dispute resolved, the situation is definitely bullish for crude prices; WTI Crude oil was at $ 50.55 up by 1.55% & Brent trading at $ 59.50 up by 1.33% as of 10:41 a.m. IST. Adding to this OPEC supply cuts also supported the prices of crude. A statement from, U.S. Commerce Secretary Wilbur Ross stated that "very good chance" of reaching a settlement, while China's foreign ministry said Beijing had the "good faith" to resolve the dispute.
API data analysis
Late night API reported crude oil inventory draw of 6.127 million barrels for the week compared to the expectation of 3.3 million barrels draw. Inventory data beat the expectation which would further reinforce the bullish trend in Crude prices in a coming week. Inventories in the Cushing for this week climbed by 3.31 million barrels, also distillate inventories for the week increased by 10.2 million barrels compared to expected build of 2.7 million barrels. US EIA Crude Oil Inventory data is due to be released today at 21:00 IST.
OPEC, as well as on OPEC supply cuts, provides support to Crude prices
Supply cuts from OPEC + would tighten the market and boost the confidence of oil investors. Oil prices were bounced higher at the start of 2019 on back of supply cuts. If they continue to control the supply prices would further move higher. Another scenario indicates that the US is now the world’s top producer of oil supply –driven by a steep rise in onshore shell drilling that would be a major concern. As result to this, US production in 2018; increased by 2 million barrels per day to a world record 11.7 million bpd. As drilling activities are still high, so it is expected that US crude production would definitely breach the previous year record and would be around 12 million bpd by end of January.
Another big event is on board today which could affect Oil price is Bank of Canada interest rate decision.
Technical levels to consider
Bouncing back above the psychological level of $50 after an almost 45% drop in just 2 months. Based on daily charts, prices are trading near 23.6 retracement level $50.51; which act as immediate resistance. If the price is able to sustain above the mentioned level then it may look to approach the 38.2 retracement level $55.55. On MCX Crude may find support near 3336 & resistance at 3625; 23.6 retracement level. Break above 23.6 retracement level could take the rally towards 4th Dec high 3867 & ultimately towards 38.2 retracement level (4015).
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