Oil jumps on production cut hopes, buyers break downtrend
Crude oil added over 2% in last night’s session after buyers gained confidence on news that supported extended productions cuts from OPEC.
Prince Abdulaziz, a long-time member of the Saudi delegation to the Organization of the Petroleum Exporting Countries (OPEC), said the pillars of Saudi Arabia’s policy would not change and a global deal to cut oil production by 1.2 million barrels per day would be maintained.He added that the so-called OPEC+ alliance between the OPEC and non-member countries including Russia would be in place for the long term. – CNBC
Tensions with Iran are another factor supporting higher prices but the U.S – China trade dispute headwinds remain in the picture. Oil has seen strong selling on bad news from the ongoing trade negotiations between the U.S and China. This week marks the third straight week of gains for Oil. Price has gained $49.30 over the last three weeks moving back above $58 a barrel.
Looking at the daily chart we can see that oil moved above its longer term downtrend line in last nights session. A new uptrend has also started to form but we would like to see another decent test by sellers get rejected and turned to a new HL before we can start to call this new uptrend confirmed. We see 58.50 as the next point of resistance and we would like to see 56.70 hold as support if the market makes a move lower. A hold at that old resistance point also fits in nicely with a new trend hold.
With production back on the radar, traders will be looking to this weeks inventory numbers due at 12:30 am Thursday morning. The market is looking for a drop of 2.9 million barrels.
Oil Daily Chart