Oil prices declined on Wednesday, July 18th 2017, after that the data from U.S. inventories showed an increase of 1.6 million barrels in the week to July 14 to 497.2 million barrels and also continuation of high output from OPEC producers. U.S. West Texas Intermediate crude futures settled at $46.30 per barrel, down 7 cents from its previous session.
Outside the United States, Nigeria and Libya are members of Organization of the Petroleum Exporting Countries (OPEC) whose supplies are still high and maintain pressure on prices.
According to French bank BNP Paribas, the current production in Libya is reported nearly 1 million barrels per day while August loading schedules for Nigeria have risen to just over 2 million barrels per day.
Nigeria and Libya are exempt from the deal between OPEC and other producers, such as Russia, to curb production by around 1.8 million barrels per day during January 2017 and March 2018. This decision was made by OPEC in order to aid prices heat-up gradually.
Apart from the fundamentals surrounding Crude oil, its technical chart reveals some worthy hints on future’s probable direction which will be discussed in more depth shortly.
After that the crude oil dipped in mid-February 2016 at around $26 per barrel (the lowest in more than a decade), prices started to rise steadily heading towards almost $56 in late 2016. Afterwards the crude started to fall calmly touching $42 per barrel, the lowest since 2017, in June. As it is depicted, the price action has formed a channel slightly rising so far.
More technically speaking, from the timing point of view, the low has been hit in exactly %161.8 ratio of time retracement from 2016 low to high, simultaneously with almost %38.2 of price retracement from the same period’s hike, which raises the chance of a super-cycle correction ending. Meaning that the crude might start another longer term bullish swing.
In short-term, the most initial sign of recovering the probable bullish trend will be triggered by passing successfully through $47.30 level which implies the higher highs and higher lows pattern required to be optimistic to the continuation of further rise. From the other hand, holding above $43.45 represents another required condition to continue the expected rise, although breaking each of aforementioned levels will clarify the direction.
Considering the higher timeframe’s signals of upward movement engulfing shorter term declines, the major resistance ahead is %52 level, which a strong and successful breakup of it would accelerate the rise to reach 2016’s highs ($55.5) as the main station.
But in case the counter scenario triggers and prices break below $43.45, watching the prices fall towards $47 for the first target is not surprising.
Adding to what have been mentioned so far, it is suggested to sit aside and closely watch previously mentioned levels for further clues on price direction.