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USOIL consolidates before 60$ zone?

Friday, January 27, 2017 5:49 AM GMT

Crude Oil is consolidating around 50 to 54$ for several days after the 18% rally from February’s lows. Investors turned to bullish following OPEC’s agreement for cutting oil production and they are still speculating that most countries will stay in line. Furthermore, non-OPEC countries (like Russia) seem to follow the same strategy. OPEC group aims for 1.8million bpd cut in the first half of 2017. On the other hand, the US continues increasing their production as IEA forecasts production growth of 320.000 bdp in 2017 to an average of 12.8 million bpd. This is something that lowered the appetite of bull speculators and prices cannot yet break out 54$.

Major players such as Baker Hughes (Oilfield services provider) say higher oil prices will spur international spending of producers to drill outside North America. 

However, let’s review the technical outlook of USOIL and identify major levels of interest. On the weekly timeframe, we can see that there is an excellent confluence of the triangle’s target (yellow vertical lines) and March’s swing high at 62+. Prices are still consolidating above 50+ zone awaiting the next catalyst.

USOIL Weekly


Heading lower on the daily timeframe, two important zones (white) are noted which define the current price range. Therefore, a potential break out above 54$ can drive prices to the target that we mentioned on the weekly TF while the violation of 50+ zone can drive prices on the rising trendline (blue).


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