Summary:

  • OPEC meeting is a key event for oil prices
  • Monthly, weekly and daily time frames suggest that a possible pullback could unfold
  • WTI oil prices (OIL.WTI on xStation5) keep moving above a local support at $57.5. Will we see another test of $59?

On the surface the latest performance of oil prices could seem to be impressive, however when we take into account that we started the year with the price at around $55 it turns out that the commodity is just $4 higher. The OPEC is going to play the major role in the upcoming hours given its meeting scheduled for tomorrow where market participants look for an extension of the ongoing production cuts deal by 9 months in order to allow the market to continue re-balancing. Before the OPEC meeting begins the market attention will be paid on today’s DoE report on a change in US oil stocks (3:30 pm BST). The street’s call forecasts a draw by 2.3 million barrels, however the API reported a less impressive drop by 1.8 million barrels.

Monthly (MN1)

Taking a look at a monthly time frame one may argue that oil prices are uninterruptedly en route to $63, however the price has bounced off a resistance nearby $59 which is underpinned by a 38.2% retracement. If the long-term move is continued, the latest pullback could constitute just a buying opportunity.

link do file download linkOIL.WTI is bouncing off a 38.2% retracement seen in a monthly interval. Source: xStation5

Weekly (W1)

A weekly time frame unveils that the latest candlestick was a white marubozu which could give a rise to a corrective move given a strong resistance being placed a bit higher. Moreover, RSI is rebounding from 70 points suggesting that a possible pullback could be slightly deeper.

link do file download linkA weekly interval could suggest that a possible correction is around the corner. Source: xStation5

Daily (D1)

Daily RSI is also sending ominous signals as it’s slid below 70 points while the price and the oscillator have diverged of late as well. A base scenario assumes a decline could reach as much as $4.7 while less corrections might reach either $3 or $3.7 given the overbalance strategy. However, before a pullback occurs there is still a possibility to see yet another test of $59.

link do file download linkRSI points to a likelihood of a pullback. Source: xStation5

4-hour (H4)

A lower time frame sees the price stuck between a resistance at $59 and a support at around $57.5. Once the price breaks the latter level, it could bring about a slide toward $55. However, needless to say that larger moves on the oil market are unlikely to come up until the OPEC meeting on Thursday.

link do file download linkWTI prices walk a tightrope between a resistance and a support. Source: xStation5