Fundamentals:
Crude oil level rallied yesterday +$1.41, and added +$0.14 today clocking a high 51.47, with expectation of additional gains, ahead of US Crude Inventories today. Oil bullish forces accelerated yesterday over signs of a gradual tightening in global oil inventories and on concerns about a supply outage at a field in the United Kingdom's North Sea that feeds into an international benchmark price.
Another contributor (Iraq), entered the field on Sunday pledging to a full compliance with oil cut deal as OPEC chief hinted. Iraq has assured OPEC that it will fully comply with an agreement to cut oil supply in order to curb crude prices and the deal as a whole is encouraging, OPEC Secretary General Mohammed Barkindo said on Sunday in Baghdad. Iraq's compliance stands now at 98 percent, the nation's oil minister Jabar al-Luaibi told reporters, after addressing a conference in the Iraqi capital, also attended by Barkindo. General compliance with supply cuts by the oil producers was 86 percent in January and 94 percent in February and the market is already balancing, he added.
On the other hand, the OPEC and Non-OPEC deal for additional six months extension is cooked on a low steam and under the table which leaked optimism to the market as traders are anticipating it. Such deal, if struck, could accelerate rising price pace of crude oil despite US increased Shale drilling.
Conclusion: Currently OPEC with above fundamentals have the upper hand, and markets should expect oil prices to climb back to Feb 2017 average $53 bp.
Note: Look forward for US crude inventories today at 2:30 PM GMT which will give new perspectives for oil levels depending on the outcome.
Technical Overview:
Resistance levels: R1 51.65, R2 52.60, R3 53.52
Support levels : S1 50.86, S2 49.60, S3 48.41
Comment: The market has turned short-term bullish and calls for a larger bull wave up around R2&R3 levels. Stable action above 51.0 sustains bullish forces and boosts additional hikes. A slip below S1 cautions for near term correction, but only a close below S2 alerts for a trend reversal action and below S3, down-trend is confirmed. R1 level is sensitive as a psychological reminder of 2017 early rallies.