Crude Oil Price Outlook Hinges on OPEC Meeting Following G20 Summit
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Oil Price Talking Points
Crude pulls back from the session-high ($60.10) even though Organization of the Petroleum Exporting Countries (OPEC) and its allies pledge to regulate the energy market throughout 2019, and the price of oil may continue to consolidate over the coming days as it fails to extend the series of higher highs and lows from the previous week.
Oil Price Outlook Hinges on OPEC Meeting Following G20 Summit
Crude appears to be catching a bid following the Group of 20 (G20) summit as Russia President Vladimir Putin and Saudi Arabia Crown Prince Mohammad bin Salman agree to extend the OPEC+ alliance, but it remains to be seen if the group will take additional steps to balance the energy market amid the weakening outlook for the global economy.
The truce between the US and China may keep oil prices afloat as the two largest consumers of crude continue to negotiate a trade deal, and the narrowing threat of a trade war may keep OPEC and its allies on the sidelines as President Donald Trump tweets that “things look very good.”
However, OPEC and its allies may take additional steps to balance the energy market as the most recent Monthly Oil Market Report (MOMR) highlights slower consumption for 2019, and efforts by the producers may help to ward off a bear market as Iraq Minister of Oil,Thamer Ghadhban, insists that “the most important thing is to achieve a stable market and avoid volatility.”
With that said, developments coming out of the 176th meeting may keep oil prices afloat if OPEC shows a greater willingness to cut production, but more of the same from the group may shake up the near-term outlook for crude as both price and the Relative Strength Index (RSI) snap the bullish trends from earlier this year.
Crude Oil Daily Chart
- Keep in mind, a ‘death cross’ formation may emerge over the coming days as the 50-Day SMA ($58.92) approaches the 200-Day SMA ($58.74), with both moving averages tracking a negative slope.
- In turn, another failed attempt to close above the Fibonacci overlap around $59.00 (61.8% retracement) to $59.70 (50% retracement) may undermine the advance from the June-low ($50.60), with a move below $57.40 (61.8% retracement) bringing the $54.90 (61.8% expansion) to $55.60 (61.8% retracement) region on the radar.
- Next downside hurdle comes in around $51.40 (50% retracement) to $51.80 (50% expansion) followed by the overlap around $48.80 (38.2% expansion) to $49.80 (78.6% retracement).
- Will keep a close eye on the Relative Strength Index (RSI) as it manages to track the upward trend from June, but a bearish signal may materialize over the coming days should the oscillator snap the near-term formation.
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For more in-depth analysis, check out the 3Q 2019 Forecast for Oil
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--- Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.