Fundamentals :
Crude oil levels plunged yesterday to 53.13 20-Feb-fresh-lows after signals that the US shale industry is recovering weighed on the market (ANZ Report).
Quote: "One of the biggest shale producers, EOG Resources (NYSE:EOG) said it had boosted its drilling budget by 44 percent after the recent rally in prices."
OPEC with Saudi Arabia in focus, has set its eye on $60 P/B as a target for 2017. The Organization of the Petroleum Exporting Countries, Russia and other producers pledged last year to cut production by about 1.8 million barrels per day (bpd) from Jan. 1. The first cut in eight years is intended to boost prices and get rid of a supply glut.
OPEC could extend its oil supply-reduction pact with non-members or even apply deeper cuts from July if global crude inventories fail to drop to a targeted level, OPEC sources have told Reuters.
Positive Chinese Caixin Manufacturing PMI released early this morning give signs of increasing oil demand and therefore pushed oil prices higher.
Conclusion : US will increase drilling rigs to glut market with oil supply and OPEC can only reply by ascending compliance and additional reduction to the initial 1.8M bpd. Today US crude inventories at 3:30 PM GMT, will bring new perspectives for oil levels.
Technical :
Trend : Bullish Sideways
Resistance levels : R1 54.27, R2 54.90, R3 55.65
Support levels : S1 53.47, S2 52.85, S3 52.35
Remark : The key player today is US crude inventories. A penetration for R1 level and stalling above it projects further attacks towards R2 level. Closing Above R2 level is an alarm for R3 level to get ready. A correction below S1 level will create congestion with further selloffs and wash towards S2 levels. Below S3 level the market to be considered downtrend.
Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.