Only this week, the price of WTI has increased by more than 4 percent, and since the beginning of October and the low of 51 USD, the increase was about 10 percent. As a consequence, very significant support on the oil market was defended, which stopped the declines three times.
Oil WTI, H4 chart. Conotoxia trading platform
On the chart, the price began to form a pattern resembling an expanding triangle, where its base is around 51 USD, and the upper limit is drawn through the recent highs. Therefore, until the support is not broken, it is possible to increase the price to USD 64, where the local resistance line is located. It seems that only a strong supply attack on USD 51 could lead to a continuation of the declines that were initiated in the second half of April. Nevertheless, one upward movement is missing to fill the pattern of the expanding triangle. Theoretically, after its completion that major oil price drops can be expected.
On the one hand, the current increases could be caused by a decrease in stocks in the United States, and on the other hand the by the shut down of a key pipeline in the North Sea. The piping system was shut down due to a power loss. Meanwhile, in the US, crude oil stocks unexpectedly fell by 1.7 million barrels last week. This was the first drop in inventories after five weeks of steady increase. Moreover, total crude oil and petroleum product reserves in the US, excluding the strategic oil reserve, fell last week by 9 million barrels to their lowest level since May, according to data from the Energy Information Administration.
The drop in stocks and the failure in the North Sea overshadowed another very weak data from Germany and Asia, which in turn may lead to a decrease in demand for oil and thus may adversely affect the increase in its prices. To prevent this from happening, representatives of OPEC countries will discuss in December about maintaining the program of cutting production. However, Russian Energy Minister Alexander Novak said this week that none of the OPEC + members had proposed a change to the terms of the agreement.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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