wti crude oil market outlook analysis

This week’s Oil report reaches a peak of Interest due to the various news coming from all over the world questioning the industry’s fundamental developments, while at the same time setting prices on fire.

The below news have significant effect on prices and could follow us in the next months also.

Production Cut of Russia with OPEC

To start with, Russia is committed to its agreement with the OPEC plus group to cut production.

Numbers confirm that approximately 35K barrels per day were cut in January with the number being even higher if compared to October 2018.

In January, Russia reached a total of 11.38 million bpd.

Russian Energy minister Alexander Novak, stepped in during the previous days and confirmed they are complying with reducing output.

Even though Saudi Arabian Oil officials stated the expected Oil cuts from Russia to be higher, we believe this gradual slowdown of production could be part of a greater plan, to maintain Oil demand higher than production levels, for the coming months.

We must note, that Russia vowed in December 2018 to cut approximately 230K bpd for the first quarter of the current year and so further cuts are expected.

OPEC Production Cuts

Furthermore, OPEC production also followed with a significant reduction on output in regards to January.

As stated by Reuters, in January the Oil squad lowered its production by an estimate of 890K barrels per day compared to December, as circumstances in countries like Iran, Libya and Venezuela helped to intensify the effect of the cuts.

Very interesting is the fact that even though OPEC is on its way for a full compliance to bring supply levels down, Iraq has increased its output and pumped above agreed levels.

In our opinion Iraq could be a rising star in the OPEC squad as on research we performed on the country in previous reports, they are taking actions of improving and uplifting their Oil activities.

To finalize our comment on OPEC we must make a reference to Saudi Arabia, Kuwait and the United Arab Emirates, which all reduced production significantly, data confirms.

Of course, the Saudis head the list as the chief Oil producer of OPEC but Kuwait and United Arab emirates cut production lower than the initial requirement which indirectly states they are like minded team players.

Commodity Price Increasing in 2019

Also, a more technical observation of Crude Oil activities until now in 2019 confirms an increase of the commodities price by 10 USD per barrel.

On 31st of December 2018 the market close with Crude Oil pricing at 45.40 USD per barrel approximately.

Today the commodity is trading at 54.55 and has peaked even higher in previous trading sessions, reaching over 55 USD per barrel.

It is our opinion that behind this rise in prices for Oil, is mostly OPEC’s production cuts and the harsh winter conditions around the globe.

Qatar investing in the US

Qatar is just days away from announcing it will be investing in the US according to a Reuter’s source.

The US energy secretary along with Qatar officials are in the final stages of announcing a collaboration of Exxon Mobil and the Golden Pass LNG facility, which will be funded with Qatar’s Investment.

The US has proved to be ahead of its competition in the exploration of energy sources and thus interest from foreign investment is most definitely expected.

Like Saudi Arabia said in our previous report, Qatar is also very close to confirming the deal.

Qatar an ex member of the OPEC team sought to make its own choices and move ahead with its own initiative, with its action now coming into fruition.

The deal could be the first step for Qatar Petroleum which is forecasted to invest $20 billion in the United States as the State firm seems eager to increase its overseas oil and gas investment.

Collision of the US and OPEC?

News from the US confirms that a fleet of Oil cargoes has formed in the Gulf of Mexico, with their tankers filled with Venezuelan oil.

The US sanctions on Venezuela have kept Oil purchasers in a difficult spot as they aim to block U.S. refiners from paying into PDVSA accounts controlled by Maduro.

Some of the Cargoes were utilized for storage purposes while others were held by trading firms having a hard time finding refiners willing to take the oil due to payment complications linked to sanctions.

As a conclusion, we could see a collision of the US and OPEC plus group in the following months, as the Oil production increases in the US and decreases for the OPEC plus group, while geopolitical matters like Venezuela still loom and could backfire at any time if not dealt with properly.

Technical Analysis on WTI Crude Oil

As we mentioned in the fundamental analysis, Crude Oil has been in a bullish momentum for all January and still maintains this movement.

If the commodity continues to increase in value we may see it break above 55.35 (R1) resistance level.

Above our (R1) the commodity may reach 56.52 (R2) resistance level with the 57.56 (R3) resistance hurdle being next.

At the moment Crude Oil is moving between the 55.35 (R1) resistance level and the 54.43 (S1) support level in a sideways movement.

If a bearish sentiment takes over, Crude Oil could move below the 54.43 (S1) support barrier with the 53.75 (S2) support hurdle and the 53.04 (S3) support area being potential next stops.

List of Forex Brokers