wti crude oil market outlook analysis

Oil prices dropped more than 6 percent to the lowest level in more than a year on Monday, as fears of an economic slowdown captured the headlines of the market.

However, oil prices rebounded on Wednesday as the commodity increased by about 4 dollars in value, making it a significant market mover for the 26th of December.

Some of the latest fundamental news in the Oil market are discussed below.

Iran started selling Crude Oil to private firms during the past October, some days before the US had enacted sanctions on the Middle Eastern country.

Iranian officials, confirmed the business continues with private exporters selling to non-government traders successfully, with no barriers.

Adding to that, it was said that during November, Iran sold 700K barrels increasing its sales compared to 280K barrels in October.

Obviously, Iran could be benefiting instead of losing from the US sanctions and they could be using bargain deals to attract purchasers as the increase of private sales has more than doubled, as numbers indicate.

Through an Iranian news source it was said that Oil Minister Bijan Zanganeh stated the payment could be made through hard currency or the Iranian Rial, providing an advantage for potential purchasers.

Saudi Aramco, the pride of the kingdoms Oil industry, has said it is currently setting up a retailing subsidiary.

According to various sources the subsidiary is part of a strategic plan for the Oil giant to expand worldwide, and will be associated with providing various automotive fuels through filling stations, domestically.

Aramco could be looking to expand in many other projects as well, like purchasing other Oil firms or creating new ones.

It is said, the Saudis aim to increase the valuation of the firm to 2 Trillion USD with the ultimate goal being a massive Initial Public offering.

The capabilities of the Saudi firm could be tremendous, however a lot of work must be done to reach that kind of valuation.

Russian Oil officials, made some positive comments regarding the future of the most vital commodity’s price.

Energy minister Alexander Novak said oil prices could stabilize during the first months of 2019.

They could be referring to the production cuts that the OPEC plus group has agreed on, starting January 2019.

He also added, the global economic slowdown in the last months and the lack of demand may have dropped Oil prices.

On the OPEC front, the United Arab Emirates’ energy minister said in the previous days, that an additional OPEC plus meeting could come to the rescue, if the expected cuts do not have the influence that is expected on Oil prices.

OPEC and teammate Russia have left the door open for a re assessment of the production cuts, but noted the next OPEC meeting in April, as the event for such a decision to be made.

The Iraqi minister, Thamir Ghadhban, also confirmed that the output cut decision could be re assessed, but also made it clear that Iraq would be willing to stretch the production agreement in April.

So what we could be viewing at the moment is a clear plan of an agreement to cut production with timeframes set in place for further action to be taken.

Continuing with Iraq, its northern Kirkuk oilfields to the Turkish port are said to remain between 80-90,000 barrels per day (bpd) as most of the crude produced is being diverted to refineries in the north.

Iraq has been on a mission to increase its oil activities with oil firms like Exxon already making moves to get involved and start pumping.

As a conclusion, we would like to note that the OPEC plus group will be taking action on its agreed production cuts, starting in some days in January.

In our opinion, the Oil market provides opportunities for the time being, as its vulnerability is reaching its peak and prices are dropping to yearly lows.

Once OPEC starts taking action we believe Oil prices could be moving much higher than current levels.

WTI Cash 1 Hour chart

It is obvious in the above chart that Crude Oil has been on a comeback mode since Monday, when the commodity opened with a negative gap.

It has now broken above the 43.60 (S2) support level and the 45.30 (S1) support level, confirming some bullish sentiment.

If the black gold is to move even higher, then the next level could be our 47.35 (R1) resistance level and then the 49.40 (R2) resistance barrier.

On the contrary, a bearish scenario could mean a downward breach of our 45.30 (S1) support level aiming for the 43.60 (S2) support level.