Crude Hold Above 2019-Low as OPEC Pledges to Stabilize Oil Prices
Oil Price Talking Points
The price of oil has bounded back ahead of the 2019-low ($50.52) as the Organization of the Petroleum Exporting Countries (OPEC) mull additional steps to balance the energy market, but crude faces a renewed risk of a bear market especially as the Relative Strength Index (RSI) snaps the upward trend from earlier this year.
Crude Holds Above 2019-Low as OPEC Pledges to Stabilize Oil Prices
Oil attempts to pare the decline from the previous week as Nigeria’s Minister of State for Petroleum Resources, Timipre Sylva, insists that “everybody agrees in OPEC that we need to stabilize the market” during an interview with Bloomberg News.
Mr. Sylva goes onto say that “we cannot allow prices just to plummet” as the crude slips to a monthly low of $50.99, and OPEC and its allies may come under increased pressure to shore up oil prices as the most recent Monthly Oil Market Report (MOMR) warns of lower consumption in 2019.
At the same time, fresh updates from the US Energy Information Administration shows weekly field production holding near the record-high, with crude output sitting at 12,400K in the week ending September 27, and it remains to be seen if OPEC+ will make a major announcement ahead of its next meeting on December 6 as the US and China, the two largest consumers of oil, struggle to reach a trade deal.
With that said, the weakening outlook for global growth may push OPEC and its allies to cap production beyond 2019, but oil prices face a renewed risk of a bear market, with recent developments in the Relative Strength Index (RSI) bringing the downside targets on the radar as the oscillator snaps the bullish formation from earlier this year.
Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss key themes and potential trade setups.
Crude Oil Daily Chart
Source: Trading View
- The broader outlook for crude oil remains tilted to the downside as a ‘death-cross’ formation took shape in July, with recent developments in the Relative Strength Index (RSI) offering a bearish signal as the oscillator snaps the upward trend from June.
- However, the flattening slopes in the 50-Day ($55.67) and 200-Day SMA ($56.60) warn of range-bound conditions as the moving averages converge with one another, with the price of oil bouncing back ahead of the 2019-low ($50.52).
- In turn, the lack of momentum to break/close below the Fibonacci overlap around $51.40 (50% retracement) to $51.80 (50% expansion) raises the risk for a move back towards the $54.90 (61.8% expansion) to $55.60 (61.8% retracement) region, with the next area of interest coming in around $57.40 (61.8% retracement).
For more in-depth analysis, check out the 4Q 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 Strategist
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.