US Crude Oil Price Breaks Higher, May Rally Further
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US crude oil price, news and analysis:
- The US crude oil price has broken to the upside from a downward sloping channel in place on the daily chart since the start of October, suggesting further strength ahead.
- It has been helped by the US-China trade war ceasefire, expectations that OPEC will cut output this week and a production reduction by Canada’s Alberta province.
US crude oil price strengthens
The price of US crude oil, which has been falling since early October, has broken to the upside from a downward sloping channel on the daily chart, suggesting a further rally if it can hold above the channel resistance line at the US close.
US Crude Oil Price Chart, Daily Timeframe (October 2 – November 6, 2018)
Chart by IG (Click on it for a larger image)
Oil has been boosted by a 90-day ceasefire in the US-China trade war, agreed by US President Donald Trump and Chinese President Xi Jinping at the G20 meeting in Buenos Aires at the weekend. The two sides have decided to halt additional tariffs due to come into force on January 1.
In addition, hopes are high that a cut in output will be agreed at the meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies that begins Thursday in Vienna. Saudi Arabia and non-OPEC member Russia have reached an agreement to reduce output although there are no hard figures yet, Russian President Vladimir Putin said at the G20 Saturday.
Moreover, the Canadian province of Alberta has said it will force producers to cut output by 8.7% while a statement by Qatar that it will leave OPEC has had little impact as its crude production is low even though it is the biggest world exporter of liquified natural gas.
Nonetheless, US suppliers are continuing to produce record amounts of crude oil, contributing to global oversupply and suggesting that any further bounce in the crude price will likely be limited.
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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.