OPEC Meeting Lifts Ailing Crude Oil Market
Today’s Spotlight Market
Crude Oil futures got a boost from signs that OPEC may cut supply to balance markets. Up to this point, Saudi Arabia has not been a supporter of market intervention, instead expecting the market to balance itself. However, a Saudi delegate was cited as saying that the country would be open to intervening if the non-OPEC countries of Russia, Oman, Kazakhstan and Mexico were also on board. The report has, at least initially, been refuted by at least one Saudi source calling it ?baseless.? Nevertheless, some traders took this as a sign that OPEC will not simply sit idly by as supplies swell and prices slump.? ?
Fundamentals
Despite the drama sparked by the quote, this OPEC meeting is expected to be a non-event for the market. Ultimately, the Oil cartel will probably not agree to cut current output with a few dissenters, as has been par for the course in recent meetings. Traders will likely have to wait until the next meeting for a possible policy shift. The scheduling of the next meeting may be the only market event to come from the pow wow. If OPEC decides to go with March as the next meeting date, it could be viewed as bullish. On the flip side, a June meeting could be viewed in a more bearish light by Oil traders. Aside from the OPEC meeting, there is more of the same for the Crude Oil market. The EIA reported another Crude Oil build of 1.2 million barrels last week. Cushing, Oklahoma inventory levels reached a record high 309.4 million barrels. The combined storage of Cushing and the Gulf Coast, which accounts for 67% of the nation?s total storage capacity, reached 70.2% utilization. While this is slightly below the record level of 71.2% set during the week ending April 24th of this year, it could be seen as very bearish fundamentally. Unlike April, there is no driving season ahead of this glut to chip away at the supply.? ?
Technical Notes? – View Today’s Chart
Turning to the chart, we see the January Crude Oil contract trading near support at the 40.00 level. Additional support may be found at 38.24. The RSI has shown some divergence from price, which may be seen as positive. Prices may be able to capture some momentum if the January contract breaks through 43.25 on the upside.
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