Brent crude oil started the weak on a negative bias with the price failed to foot above last week’s high. The underlying weekly trend continues to be positive, but indicators are indicating divergence.
A sustained trade above 71.55$ last three-day high will accelerate up move to take the price higher towards the 61.8% fib reaction to 72.70$ followed by 73.20$ December 20104 high.
The flip side support zone finds between 70.00-70.30$. Turning to the daily indicators’ RSI has been propelling lower, and the oscillator is remaining bearish crossover. Based on this backdrop we expect there is a limited headroom available in this short week and the coming weeks as well.
Reuters said OPEC could raise oil output if prices increase, shortages mount. In a note, they said “OPEC could raise oil output from July if Venezuelan and Iranian supply drops further and prices keep rallying because extending production cuts with Russia and other allies could overtighten the market, sources familiar with the matter said. Venezuelan crude production has dropped below 1 million barrels per day (bpd) because of U.S. sanctions.”
Oil traders will focus on this week’s 20th International Oil summit in Paris on April 19th.
We expect the oil price to trade in a narrow price band between 73$-68.00$ for the next three days.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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