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Tuesday, December 13, 2016

WTI and Brent Crude Oil charts: bulls run amok as OPEC and non-OPEC countries agree to cut crude production from Jan '17

WTI Crude Oil chart


The daily bar chart pattern of WTI Crude Oil had formed a 'reversal day' bar (higher high, lower close) on Nov 22. That triggered a correction below all three EMAs into bear territory.

On Nov 30, oil's price bounced up with massive volumes and nearly touched the 50 mark before retreating a bit. OPEC countries finally agreed to a production cut after giving some leeway to Iran, Libya and Nigeria.

Oil's price continued to rally and touched a high of 52.50 on Dec 5, only to correct below 50 two days later. The up move resumed once again. A decision by non-OPEC countries to also cut production saw oil's price soaring to 54.50 on Dec 12 - its highest level in 17 months - before closing below 53.

In the process, a bearish 'shooting star' candlestick pattern has been formed. Some correction and consolidation is likely to follow.

Oil's price is trading well above its three rising EMAs in a bull market. Daily technical indicators are looking overbought and showing negative divergences by failing to touch new highs with oil's price.

On longer term weekly chart (not shown), oil's price has closed above its 20 week and 50 week EMAs, but well below its sliding 200 week EMA in a long-term bear market. Weekly technical indicators are looking bullish, but Slow stochastic has entered its overbought zone.

Brent Crude Oil chart



Bullish technical indicators had led to the following comment in the previous post on the daily bar chart pattern of Brent Crude Oil: "Oil's price may attempt to test its Oct '16 top."

Shortly after writing the post, oil's price rose to touch the 50 level on Nov 22, but dropped back into bear territory below its three EMAs on Nov 29. The OPEC production cut deal led to a sharp bounce supported by huge volumes on Nov 30.

Oil's price easily climbed past its Oct '16 top before pulling back a little. Agreement by non-OPEC countries to also cut production from Jan '17 onwards triggered a price surge to the 58 level on Dec 12. A much lower close caused the formation of a bearish 'shooting star' candlestick pattern.

All three EMAs are rising and oil's price is trading above them in a bull market. Daily technical indicators are looking bullish and overbought. RSI and Slow stochastic are showing negative divergences by failing to touch new highs with oil's price.

Some correction and consolidation can follow before oil's price can rise to 60. Don't expect prices to rise much higher than that. Why? Because US shale oil producers may then find it profitable to re-enter the market. 

On longer term weekly chart (not shown), oil's price has closed above its 20 week and 50 week EMAs, but well below its falling 200 week EMA in a long-term bear market. Weekly technical indicators are looking bullish, but Slow stochastic has entered its overbought zone.

1 comment:

Subhankar said...

Oil prices fall after US hikes interest rates

http://www.moneycontrol.com/news/commodities/oil-prices-fall-after-us-hikes-interest-rates_8116481.html