Buoyed By Weak Dollar and OPEC Optimism, Brent Hits Three-Week High
Brent crude took off more than 3.3% on Monday, soaring to the highest level in three weeks. The commodity price was boosted by a weakening U.S. dollar and rising speculations that the Organization of the Petroleum Exporting Countries might agree to a supply-cut deal later this month.
Speaking at a news conference in Lima after an Asia-Pacific Economic Cooperation summit on Sunday, Russian President Vladimir Putin said he sees a “high probability” that an agreement to curb oil production will be reached at the meeting in Vienna on November 30. Russia’s President added that “We will do everything that our partners from OPEC are expecting. To freeze crude production is not an issue for us”.
OPEC was reported to move closer to its output cut agreement as Iran, which has been ramping up its crude production to regain lost market share following years of Western sanctions, may be given an exemption if it agrees to at least cap its output at the current level. Other OPEC members including Iraq, Libya and Nigeria, whose exports have been restrained by violence, have also asked to be exempted from any output-cut deal.
Iranian Oil Minister Bijan Namdar Zanganeh, who met OPEC’s secretary-general Mohammed Barkindo in in Tehran on Saturday to discuss a proposal that offers Iran to reduce output by as much as 1.3 million barrels a day, claimed after the meeting that OPEC is “highly likely” to reach a final agreement to curb oil production in its Nov. 30 meeting.
Meanwhile, the U.S. dollar retreated from last week’s 13-1/2-year highs, bolstering oil price as the dollar-dominated commodity becomes more affordable for purchasers using other currencies.
Fig: Brent D1 Technical Chart
After two failed attempts to break above the 23.6% Fibonacci level last week, Brent crude has finally breached this level and also crossed over the short-term MA20. The RSI index which has surpassed 50 line confirms the uptrend. The commodity price is heading upwards to the long-term MA50 at around 48.97.
Buy Stop at 48.20, Take profit at 49.00, Stop loss at 47.80