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Crude price fell steeply to close below $32 per barrel yesterday after comments from ministers of OPEC member countries raised concerns that last week’s unprecedented proposal in Doha might not come to fruition.
In an attempt to guide the oil price back to its peak, at a meeting last Tuesday, Saudi Arabia and three other OPEC members had a historic deal with Russia to freeze their crude oil output at January levels.
However, the cooperation seemed to come to an end as Iran, that has just been liberated from sanctions and is planning to boost output by 1 million barrels per day, said the deal was an “unrealistic demand”, while Saudi Arabia announced that the kingdom would not cut its output because it did not trust other produces to follow.
At a conference in Houston Ali Al-Naimi, Saudi Arabia’s Oil Minister, said that high-cost producers should bear the burden of reducing the current surplus.
After that, his Iraq’s counterpart, Adel Abdul Mahdi on Wednesday said in an interview in Tokyo ““If some people freeze and others raise, then this is not a good policy. So we have to reach a complete agreement.”
Oil’s slump, not to mention concerns about growth in China and uncertain destiny of the U.K in the EU, has pushed global stocks into new falls. Asian and European equities followed the footstep of the U.S session when major indexes from MSCI Asia Pacific Index to FTSE 100, DAX, etc. retreated.
Today, at 03:30 P.M. GMT, U.S Energy Information Administration is due to report the change in the number of barrels of crude oil held in inventory by commercial firms during the past week. The reading is forecast to lower to 2 million barrels in the week ending on Feb 19.
Fig: BRENT D1 Technical Analysis.
The crude price has lowered for the second trading day and is heading toward the support at $31.539 per barrel. Brent oil broke through the MA 50 yesterday after dipping more than 4.4 percent.
Since Feb 15, the U.K’s oil has hovered around the 23.6 Fibonacci retracement. In the long term, no clear trend has been formed yet as the RSI (14) is moved around 50 level.
Buy Digital Put Option at 32.32 and Digital Call Option at 34.10.