Double Top Training Intact before OPEC meeting
Oil Price Talking Points
Oil price rebounds from session low ($ 65.25) following larger-than-expected drop in US stocks, but double-top formation established earlier this month remains largely intact so that the rebound from the May low ($ 61.56) does stimulate a test of the March high ($ 67.98).
Oil Price Forecasts: Double Top Formation Intact Before OPEC Meeting
New data impressions from the US appear to be supporting the price of oil as crude inventories shrink 1.662m in the week ending May 21 against projections of a 1.05m drop .
Signs of heavier drinking may Organization of the Petroleum Exporting Countries (OPEC)on track to gradually restore production over the next few months as the “ the recovery should accelerate in the second half of the year“, And the group can stick to the production adjustment table over the next few months, with US production remaining at its lowest level since 2018.
A closer look at new figures from the Energy Information Administration (EIA) showed weekly field production held steady at 11,000K for the third week in a row, and the data could encourage OPEC and its allies to stick to the schedule. current production rate at the next joint ministerial meeting. Meeting of the monitoring committee (JMMC) on June 1 the most recent Monthly Oil Market Report (MOMR) predicts that global oil demand in 2021 “will increase by 6.0 mb / d, unchanged from last month’s estimate, to an average of 96.5 mb / d. “
That said, the price of oil may consolidate ahead of the JMMC meeting with OPEC and its allies on track to gradually restore production, but the double-top formation established earlier this month remainsintact like rebound from May low ($ 61.56) takes place before March high ($ 67.98).
Daily Oil Price Chart
Source: Trading view
- Keep in mind that crude broke out of the linked price range starting in the third quarter of 2020 establishing an uptrend channel, with the Oil price exiting 2019 high ($ 66.60) as 50-day SMA ($ 62.67) and SMA 200 days ($51.ten)established a positive slope.
- It remains to be seen whether the drop from the March high ($ 67.98) will turn out to be a correction in the larger trend or one change in market behavior the price of oil fails to maintain the uptrend channel of the end of last year, but recent developments in the Relative Strength Index (RSI) warn of a bigger one decline rough prices as the indicator breaks the uptrend from the start of this year.
- the oil price broke the opening range for May after the $ 67.60 test attempt failed (78.6% expansion) zone, with a double top formation taking shape amid the lack of momentum to test the March high ($ 67.98).
- Failure to hold on to the streak of higher highs and lows from the start of the week could push the price of oil back towards the $ 64.20 region (61.8% expansion), with a break / close below of $ 62.70 (61.8% retracement) to $ 62.90 (78.6% expansion) area bringing area $$ 61.80 (50% expansion) on radar.
- The next region of interest is coming $ 59.40 (38.2% expansion) followed by the Fibonacci overlap around $ 58.00 (50% expansion) to $ 58.40 (23.6% expansion).
— Written by David Song, Currency Strategist
Follow me on Twitter at @DavidJSong