- Oil gains on Saudi and OPEC talk
- Price recently held important support at 54.90
- Market finely poised heading into inventory releases
One of the biggest risers today is Oil, with Brent moving back above the $56 level and currently sitting on gains of almost 2%. The gain could be attributed to several factors with a combination of positive developments in the past 24 hours occurring that are seen as supportive of price.
Saudi Aramco, the state oil company of Saudi Arabia, has announced that the firm will ship 560k barrels a day less than their customers are requesting in November. This is an unusual step from Saudi Aramco in going public with their export plans for next month and it could be seen as a deliberate attempt to reassure the market that they are committed to reducing global stockpiles.
OPEC secretary General Barkindo has given a speech in New Delhi during which he noted a “massive drawdown” from oil stocks in the last few months and stated that the US and OPEC agree that both need stability in the oil market. Barkindo also said that both parties will reconvene their meetings for an oil output cut deal.
Tomorrow will see the API inventory data released from the US before the more widely viewed DOE equivalent on Thursday. Inventories have received a boost lately from the storm damage seen to refineries from hurricane Harvey and Irma but after 3 consecutive rises in September, the last two DOE numbers have shown declines. The damage ot refineries is believed to be not as bad as feared and another negative reading this week would further support the longer term trend of falling inventories seen for much of the past 6 months.
US Oil inventories have been steadily declining for much of the past 6 months. Source: Bloomberg
The technical picture for Oil is not clear at present with the market recently respecting key support around 54.90 and also managing to hold above the 21 day EMA. The EMAs remain in a bullish orientation and indicative of an uptrend but bulls will want to see a clean move above 57.25 before they consider the latest sell-off to be over.
Brent Oil respected prior resistance at 54.90 but longs will want to see a move above 57.25 before the are confident the recent weakness has passed. Source: xStation