The crude oil market has continued to surge higher after last week’s deal by the OPEC cartel to cut production. The jury is still out on whether or not OPEC/Russia can implement the agreed production cuts, though as long as the psychologically important $50 level holds, upside focus will continue.
Fundamentally, the 1.2 million barrels per day (bpd) production cut agreed within OPEC in Vienna, following failure earlier in the year at Doha and Algiers, could be the tipping point the oil industry has been waiting for. It is hoped non-OPEC countries will contribute a 600,000 bpd cut (with 300,000 coming from Russia). Russian and OPEC officials are said to be meeting in Moscow 10th December to finalize the agreement. Agreement is one thing but implementation remains open to question as historically OPEC countries have been very reluctant to stick to their own agreed quotas. Monitoring any agreement remains difficult.
Technically, there is resistance, a strong pivot point and triple high around the $51.85 level on the Daily chart. Today USOil trades north of this level at $52.00 as the USD weakens a little, following a strong run during November and in line NFP figures on Friday.
Over the longer-term the Monthly time frame shows support around the 20 period moving average at $50.50 and an upside Target 1 of $56.00 (38.2 Fibonacci level) and Target 2 $62.00 (50 period moving average) should the $55.00 resistance area be breached.
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