Brent Crude Oil News and Analysis
- Oil unable to arrest the decline despite imminent SPR purchases
- Saudi Arabia issues support for additional supply cuts and a slow withdrawal of the policy to keep prices stabilized
- The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library
Oil Unable to Arrest the Decline Despite Imminent SPR Purchases
The US Department of Energy has stepped up efforts to refill its stockpile after a record withdrawal last year to control inflation. The DoE is now due to receive 4 million barrels back into its reserves by February instead of the summer and appears to show a new urgency to take advantage of lower oil prices. The chart below shows the slight uptick in SPR stocks after the US added 300,000 barrels in the second last week of November.
Source: EIA, prepared by Richard Snow
In addition, Saudi Arabia has welcomed the subsequent voluntary cuts and clarified that the withdrawal of any cuts will happen at a managed pace.
Oil Technical Levels of Consideration
Oil now tests the lesser observed 50% Fibonacci retracement at $77 after the three day sell-off which is currently on track for a fourth. Oil markets have remained bearish despite the announcement of the supply cuts with markets unconvinced that the cabal is unified. Some African nations had raised objections to lower production quotas delaying the date of the original meeting and it would appear that there are still dissenting nations after the decision.
There is little standing in the way of a move towards $71.50 β a prior level of support that halted price declines. The RSI will be crucial to observe over the coming days as it nears oversold conditions. The global growth slowdown is also not helping matters as market participants factor in lower future oil demand. Furthermore, the US has achieved record levels of production for a second month in a row, adding to global oil supplies which counteracts the latest OPEC move to cut production further.
Brent Crude Oil Daily Chart
Source: TradingView, prepared by Richard Snow
--- Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX
