Crude Oil Gaps Higher After OPEC Cools Off Production Hikes
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TALKING POINTS: CRUDE OIL, OPEC, IRAN SANCTIONS, EIA
- Crude oil boosted by lack of output increase by OPEC members and allies
- Supply shortage fears and sanctions on Iran help prices’ recent rally
- Asia Pacific Petroleum Conference, inventory data in focus next
Crude oil prices gapped higher from weekend trading, in response to announcements from delegates of the Organization of the Petroleum Countries and allied governments crossing the newswires. The meeting concluded without any decision to increase oil production, a departure from the organization’s commitment in June to hike supply of the commodity. In the meeting, the committee stated that the “current oil market outlook” was satisfactory, with an “overall healthy balance between supply and demand”. It also encouraged “countries with spare capacity to work with customers to meet their demand during the remaining months of 2018”.
Crude Oil Chart (Daily)
Recently, crude oil prices have benefited from unnamed Saudi Arabia sources implying that the producer would not increase production, being comfortable with prices above $80/barrel. Furthermore, the commodity has also rallied in the wake of US sanctions on Iranian oil exports and fears about OPEC-member depletion rates. Prices have been in an uptrend for the majority of this year, breaking out of a downtrend channel in July in response to the organization’s goal to boost supply.
Crude Oil Chart (Daily)
Looking ahead, crude oil prices await the release of US Energy Information Administration and Department of Energy inventory figures later this week. Traders should also keep a close eye on the release of the Baker-Hughes Rig Count, in addition to announcements from the Asia Pacific Petroleum Conference and further statements from President Trump regarding OPEC.
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--- Written by Megha Torpunuri, DailyFX Research Team
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.