Brent Crude Oil Price Ripe For Correction Lower After OPEC Report
- The price of Brent crude oil slipped back Tuesday and in Asian trading Wednesday after an OPEC report forecast weaker demand growth for its crude.
- After the recent surge higher in the price, a deeper correction now looks possible.
The price of Brent crude oil, the global benchmark, slipped back Tuesday and in Asia Wednesday after the Organization of the Petroleum Exporting Countries’ 2017 World Oil Outlook forecast slower growth in demand for its crude than previously expected alongside an increase in supply from its competitors.
While the Tuesday fall was small, around 0.5%, it came after a lengthy climb that has taken the price from below $45/barrel in late June to current levels close to $64 and could be the start of a larger correction lower.
Chart: Brent Crude Daily Timeframe (June 1 – November 8, 2017)
As the chart above shows, the 14-day relative strength index is currently above 70, suggesting the market is in ‘overbought’ territory and that a short-term correction, or at least a period of consolidation, could be on the way. The price is back to levels not seen since June 2015 and the latest Commitments of Traders Report from the US Commodity Futures Trading Commission showed total net-long positions in US crude at near-record highs, suggesting that speculative buying could slip back from here.
OPEC and non-OPEC countries are due to meet in Vienna on November 30 and the organization is seeking to achieve a consensus agreement before then on how long to extend a global pact to curb oil production, its secretary general said Tuesday.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at firstname.lastname@example.org
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.