WTI RISES ABOVE MA5 ON TRADE TALK HOPES AND OPEC CUTS
WTI Crude futures are currently trading at $49.01-higher by 0.67% as compared to the previous closing. Crude prices rose today, supported by hopes that talks in Beijing between the U.S. and Chinese officials might defuse a trade dispute between the two countries, while OPEC-led supply cuts also tightened markets.
Brent crude futures were trading at $58.08-higher by 0.78% as compared to the previous closing.
U.S. Commerce Secretary Ross said on Monday “I think there’s a very good chance that we will get a reasonable settlement that China can live with, that we can live with,” as officials from both countries held talks to end the spat.
There is also concern that a worldwide economic slowdown will reduce fuel consumption.
As a result, the hedge fund industry has cut significantly its bullish positions in crude oil futures.
S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $50 per barrel for WTI.
Oil prices so far in 2019 have been buoyed by supply cuts from the OPEC including top exporter Saudi Arabia, as well as non-member Russia.
But looming over the OPEC-led cuts is a surge in U.S. oil supply, driven by a steep rise in onshore shale drilling.
As a result, U.S. crude oil production jumped by 2 million barrels per day last year to a world record 11.7 million bpd. With drilling activity still high, the markets expect U.S. oil production to rise further this year.
Consultancy JBC Energy said it was likely that U.S. crude production was “significantly above 12 million bpd” by early January.
Adding to supply-side data, reports which are published by the API and the EIA every week, the API is scheduled to report U.S. crude supplies for the week ended 4th January later today. Previously, the API reported that U.S. crude supplies fell by 4.5 million barrels for the week ended Dec. 28. The EIA will report US crude inventories for the week ended 4th Jan. on Wednesday. Previously, the EIA reported that U.S. crude inventories rose by 0.007 million barrels for the week ended December 28.
On the technical front, the RSI is currently at 53.41% and suggests that the market can move in the upward direction. The current price is above the MA5 (48.31). The current price is above the middle line of the Bollinger Bands and is heading upwards.
Overall Bias is Positive and short-term trades can be initiated with below mentioned Stop Loss and Profit targets.
Trade Suggestion-Limit Buy At 48.80 Take Profit At 49.50 Stop Loss At 48.40