We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bullish
More View more
Real Time News
  • My phone's decided to give up the ghost and I've been phoneless for 24 hours. Not coincidentally, I've been a machine tackling errands around the house. What a time to be alive.
  • #Gold remains stuck in a range as a range of conflicting forces battle and fail to take control of price action. Get your $gld market update from @nickcawley1 here: https://t.co/pw7UjkUyqH $XAUUSD https://t.co/YD8L6knjhe
  • Geopolitical developments send oil prices soaring or falling. Get your market update here: https://t.co/0znHZPvPON https://t.co/s358dvMBeR
  • Currency markets may be battered by breakneck volatility if a slowdown in global economic growth triggers a collapse in the fragile market for collateralized loan obligations (CLOs). Get your market update from @ZabelinDimitri here:https://t.co/KfjjtaXs7b https://t.co/sWeSlv33pb
  • The #Dow Jones and #Nasdaq 100 will await key earnings from some of the world’s largest manufacturers and tech companies while the #DAX grapples with freshly-imposed tariffs. Get your equities market update from @PeterHanksFX Here: https://t.co/u2lG19JFt3 https://t.co/OHs4rQEH7T
  • Crude #oil prices are consolidating above a key support zone we’ve been tracking for more-than three months now. Get your market update from @MBForex here: https://t.co/XaACvEpLG4 #OOTT https://t.co/XjmjUt4Par
  • Why trade with Bollinger Bands®? Find out as a day trader, how you can use it to your advantage:https://t.co/dwODDDSsFi @WVenketas https://t.co/SYduJ5k9mL
  • As the global economy continues to contract, the risk of geopolitical threats undermining financial and economic stability are rising, leaving the door open to violent volatility. Get your market update from @ZabelinDimitri here:https://t.co/2HEzqPobvA https://t.co/k13SwJmbRm
  • RT @IGSquawk: We're currently pricing #GBPUSD at 1.2852 and #FTSE at 7129.2 That's a drop of 1.18% from Fridays close for GBPUSD and 0.22%…
  • #DidYouKnow a #Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/c51s3IBcEu https://t.co/K6W9X4v8XD
Oil Outlook Supported by Waning OPEC Output & Stagnant Non-OPEC Supply

Oil Outlook Supported by Waning OPEC Output & Stagnant Non-OPEC Supply

2019-02-07 17:02:00
David Song, Currency Strategist
Share:

Oil Talking Points

Oil pulls back from a fresh yearly-high ($55.75) despite a smaller-than-expected rise in U.S. Crude Inventories, but the current environment is likely to keep oil prices afloat amid the weakening outlook for supply.

Image of daily change for major financial markets

Oil Outlook Supported by Waning OPEC Output & Stagnant Non-OPEC Supply

Image of daily change for oil prices

It seems as though the advance from the 2018-low ($42.36) is starting to unravel as President Donald Trump notes that ‘the United States is now the number one producer of oil and natural gas in the world’ while delivering the State of the Union Address, and the Organization of the Petroleum Exporting Countries (OPEC) may have little choice but to curb production throughout 2019 as the group pledges to rebalance the energy market.

It remains to be seen if OPEC and its allies will extend the six-month agreement at the next meeting in April as Rosneft, the third-largest producer in Russia, plans to reduce oil output by roughly 90,000b/d until July 1, and the group may continue to respond to the expansion in non-OPEC production even as the U.S. imposes sanctions against Petróleos de Venezuela, S.A. (PDV S.A.).

Image of EIA weeky field production of crude oil

Keep in mind, updates from the U.S. Energy Information Administration showed Crude Inventories increasing 1263K the week ending February 1 versus projections for a 1850K rise, while weekly field production held steady at 11,900K for the fourth consecutive week. Subdued growth in non-OPEC output should keep crude afloat over the near-term, and the current environment may raises the risk for higher oil prices especially as Russia Minister of Energy, Alexander Novak¸ endorses a price range of $55-65bbl.

In turn, the recent pullback in crude may be short-lived, with oil more at risk of facing range-bound prices rather than a marked selloff as an inverse head-and-shoulders formation appears to be taking shape. At the same time, the Relative Strength Index (RSI) instills a constructive outlook for crude as the oscillator extends the bullish formation from November. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Oil Daily Chart

Image of oil daily chart
  • Outlook for crude remains constructive following the break of the December-high ($54.55), but the failed attempt to close above the $55.10 (61.8% expansion) to $55.60 (61.8% retracement) region may generate range-bound conditions.
  • In turn, the monthly opening range is in focus as crude carves a fresh series of lower highs, with the $51.40 (50% retracement) to $52.10 (50% expansion) area on the radar.
  • A break/close below the stated region raises the risk for a larger correction, with the next downside region of interest coming in around $48.10 (23.6% expansion) to $49.80 (78.6% retracement).

For more in-depth analysis, check out the 1Q 2019 Forecast for Oil

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other markets the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.