US Crude Oil Price May Rise as OPEC Struggles to Reach Agreement
Crude oil price news and analysis:
- OPEC meets in Vienna on Friday and an agreement to increase output is in jeopardy.
- That is potentially positive for crude oil prices.
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OPEC output deal in doubt
The Organization of the Petroleum Exporting Countries meets on Friday to discuss an oil-production increase but an agreement is far from certain, with the Iranian oil minister telling reporters on his arrival in Vienna that he does not believe a deal can be reached.
Saudi Arabia is in favor of a small increase in the second half of this year while Russia, which joins the gathering on Saturday with other non-OPEC members, supports a larger rise. However, Iran’s opposition could scupper an agreement, which has to be unanimous, raising the possibility that Saudi Arabia and its allies would have to go it alone.
That would potentially give crude oil prices a boost after their recent falls.
US Crude Oil Price Chart, Daily Timeframe (Year to Date)
Crude oil prices were lifted Wednesday by news from the American Petroleum Institute of a drop in US crude stocks in the week ended June 15 and a lack of a deal at the OPEC meeting could extend their advance. However, from a technical perspective, the price is now close to trendline resistance, which would have to be broken first.
Oil price sentiment
As for sentiment, retail trader data show 60.4% of traders are net-long, with the ratio of traders long to short at 1.53 to 1. In fact, traders have remained net-long since May 25, when the price of US crude traded near $71.92/barrel; the price has moved 9.6% lower since then. The number of traders net-long is 1.1% lower than yesterday and 19.1% lower from last week, while the number of traders net-short is unchanged than yesterday and 16.8% lower from last week.
At DailyFX, we typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US crude prices may fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that prices may soon move higher despite the fact traders remain net-long.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.