Can Brent Crude Oil Prices Go Above $80 Again?

Can Brent Crude Oil Prices Go Above $80 Again?Can Brent Crude Oil Prices Go Above $80 Again?

Brent oil prices are oscillating in between the fundamentals of voluntary production cut by OPEC members supporting the oil prices and U.S. Shale Production increase curbing the oil price rise.

The tug of war between the two economies is keeping the oil price bidirectional.

The increase in production cut by OPEC members, more than they initially agreed upon, supported the oil prices and Brent Oil Futures surged to mark a three-month high of $67.73 (on 22nd February 2019) from the level of $50.47 (closing price on 24th December 2018).

However, the building Shale-Oil production concerned the oil investors over the building supply chain and in turn, exerted pressure on crude oil prices, and it marked a correction from the level of $67.73 till $64.32 (Day’s low on 26th February 2019).

The Brent Oil prices again surged over the production loss and weaker export from Venezuela. The oil export to the U.S. from Venezuela dropped to 920,000 barrels per day (for February) as compared to the average export of 1.5 million barrels per day to 1.7million barrels per day.

The oil price fluctuation has also been subjected to U.S. Sanctions on the Venezuela’s state-run PDVSA, which intended to pressurize the current president of the country Nicolas Maduro to step down from the position of the president and support the opposition leader Juan Guido.

The sanctions intended to control the plutocracy of the country, which uses the oil power to transfer wealth from the poor of the country, and thus, in turn supported the oil prices.

In the present status Quo, there has been a marked fall in the weekly U.S. crude oil inventory from the high shale production level of 10.27 million to -8.647 million.

Source: Thomson Reuters: U.S. weekly Crude oil inventorySource: Thomson Reuters: U.S. weekly Crude oil inventory

And on the other hand, Saudi oil production is marking a progressive decline, which in turn is providing support to the oil prices. The Saudi oil production marked a decline from 11bpd on 30th November 2018 to a level of 10.12mbd as on 28th February 2019.

Source: Thomson Reuters: Saudi Oil productionSource: Thomson Reuters: Saudi Oil production

The falling US oil inventory along with the voluntary production cut by the OPEC members is expected to support the oil prices.

Technical Outlook:  

Source: Thomson ReutersSource: Thomson Reuters

Following the development on the daily chart,

The Brent Oil future is hovering between the exponential moving average of 7 and 20 days.  The 200-days exponential moving average is marking a level of $67.05, where the commodity is expected to take an initial hurdle. The Relative Strength index (14) is noticed at 57.101 and is above the mean value of 50. The MACD (12, 24, 9) signal line is below the average 9-period line and is marking a level of 1.01, and the 9-period average is noticed at 1.17. The possibility of cross over exists, if the prices breach the initial hurdle of $67.05.

The prices have taken strong support around the level of $64.50 and rebounded twice towards the upside from the same level.


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