November Crude Oil rallied on Monday, September 26 2016, as the International Energy Forum commenced in Algeria. The forum has 72 member countries and brings together various international organizations, including chief executive officers, ministers from producing countries, various officials and so called experts to discuss energy (Natural Gas and renewable energy also) and the issues it faces.
Discussions are held on investments (reductions in crude oil and the effect on future supply), demand (slowing global economy) and the prospects for renewable energy and energy efficiency. The main interest in the meeting stems from the informal meeting to be held right after the forum shuts down on Wednesday. OPEC and NOPEC (Russia) are meeting in the hope of creating a dialogue and establishing parameters for some sort of freeze in order to shore up crude oil prices.
Participants have already stated that no formal decisions will be made at the meeting, but statements that Saudi Arabia will freeze production at January 2016 levels (10.2 million bpd) if rival Iran freezes production at a hard 3.6 million bpd has lifted prices. Crude traded up to test trendline resistance (46.32) with the day’s high of 46.20, before drifting lower and settling at 45.93 and then ending the session at 45.92.
Traders bid up price on supportive headlines and then it drifted lower when denied. This is what to expect for the next couple of days, rumors and then denials until it’s over and a formal announcement is made. I don’t know what to expect, but my guess is the announcement will be that we are close to an agreement so stay tuned for more headline trading.
They want to keep price climbing without actually making any decisions on a cut or a freeze, in my opinion, and keep traders salivating for more bullish headlines. Does Saudi Arabia want to give up market share to Iran? To the US, to Russia? They need the funds from crude oil, so do all producers, as this is where they get most of their revenue. If price can break free from trendline resistance which drops to 46.21 for Tuesday’s trade, a test of resistance at 47.30 is possible. Longer term trendline resistance is at 48.15. Support is at the 21 DMA (45.13) and then the 8 DMA at 44.94 and the 50 DMA is at 44.63.
- High 46.20
- Low 44.43
- Last 45.62
Daily Pivot Points for 9/27/16
- R2 47.19
- R1 46.40
- PIVOT 45.42
- S1 44.63
- S2 43.65