On Tuesday the price of Brent oil dropped to 2-week minimums to the level of $50 per barrel. This rapid fall was caused by the market's disappointment in the results of OPEC countries meeting in Vienna.
The participants of the meeting decided to extend the OPEC+ agreement until March 2018 while keeping the reduction volumes at the level of 1.8 mln. barrels a day. However, the market had already been aware of the 9 months extension several weeks before that, and had included it into the price. The participants of Vienna forum were expected to act more decisively, for instance, to extend OPEC+ by 12 months or to increase the volume of cuts.
However, nothing like that happened, and this caused the disappointment of investors. According to the experts from Barclays (LON:BARC), the recent decision of the cartel may help oil prices rise to $56 per barrel in the medium term, but positive factors for the increase of LTO production in the USA will remain.
Technically, by now the price has risen above the level of 51.55 (correction 38.2%) and may continue growth to 52.75 (correction 23.6%) and 53.40 (middle line of Bollinger® Bands). This is confirmed by Stochastic, which is trying to leave the oversold zone and form a buy signal. In case the level of 51.55 is broken down, the fall may continue to the levels of 51.00 and 50.60. The reversal may be facilitated by today's publishing of weekly data on the number of oil rigs in the USA by Baker Hughes.
- Support levels: 52.75, 53.40, 54.65.
- Resistance levels: 51.55, 51.00, 50.60, 49.70.