Midwest US crude oil futures are expected to decline for a week after returning all previous gains. This week, buyers gained strength during OPEC speculation, and allies will expand or even increase production cuts, but prices have shifted southward during the week, swirling reports that President Trump is considering easing sanctions against Iran. . Will lead to increased supply.
Basically, at the beginning of the week, optimistic sentiment was promoted by optimism about supply. At the end of this week, the weakness is being supplied by a pessimistic outlook for demand.
A bullish factor
Stronger this week was the sharp increase in US crude oil inventories, with Saudi Arabia electing a new oil minister and OPEC and its allies pledged to continue to reduce production by 1.2 million barrels per day.
Saudi appoints new energy minister
What is interesting to optimistic traders this week is the appointment of Saudi Arabia's son Abdulaziz bin Salman as Sunday's energy minister.
Prince Abdulaziz is not new to the oil game. He is a long time member of the Saudi delegation to OPEC and is familiar with its operations. He said Sunday that the pillars of Saudi Arabia's policy will not change and a global deal that cuts 1.2 million barrels of oil a day will be maintained. The good news is that this plan has strengthened the market for at least two years.
Prince Abdulaziz also added that the so-called OPEC + alliance, which consists of non-OPEC producers including OPEC and Russia, will take place in the long run.
US Energy Information Management Weekly Inventory Report
The EIA reported Wednesday that US crude oil supplies fell 6.9 million barrels in the week ending September 6. Traders were looking for a 2.8 million barrel reduction.
The EIA report also showed a decline in the supply of 700,000 barrels per week for gasoline and an increase of 2.7 million barrels of distilled water reserves. Analysts were looking for an increase of 1.4 million barrels in gasoline and 220,000 barrels in distilled water supply.
The weakness that prevented the initial rally and plunged prices over the past three days was speculation that President Trump would ease sanctions against Iran in a well-behaved gesture ahead of Iran's meeting with Hassan Luhani. Surplus next year.
Washington eases sanctions on Iran
The steep sale this week began with the dismissal of national security adviser John Bolton and the report that President Trump weighed in on sanctions against Iran.
According to Bloomberg, Trump discussed sanctions on Iran to secure talks with Iranian President Hassan Lu Hani later this month.
Bolton argued that the Bloomberg report, originating from three unnamed sources, opposed this step. Because of this, he may have been fired or abandoned his position early in the week.
The easing of sanctions against Iran will not only bring new oil to market, but also hurt the market before the end of the year, experts say. Even if the US and China have signed a contract to end the October trade war, it's a big concern because two months won't take enough time to increase demand, which could lead to potential global oversupply.
Bringing more oil to market will weaken attempts to stabilize OPEC-led supply and supply prices.
IEA expects low demand growth
The International Energy Agency (IEA) assumed that it did not change the forecast for 2019 oil demand growth to 1.1 million barrels per day and 1.3 million barrels per day in 2020. In economic environment and trade disputes.
November WTI crude oil weekly technical analysis
Weekly trend indicator analysis
The main trend is down. Trading through $ 60.77 turns the main trend up. The move through $ 50.48 indicates that the downtrend has resumed after several weeks of backlash price action.
The main range is from $ 73.52 to $ 45.05. A return zone of $ 59.29 to $ 62.64 is resistance.
The small range is from $ 45.05 to $ 65.23. Return zones from $ 55.14 to $ 52.76 are supported.
However, the market has bounced between the rebound zones since early June, while forming a lower top and a lower bottom, indicating a downward bias.
Weekly trend indicator forecast
Based on pricing this week, the direction of the November WTI Crude Oil Futures contract by the weekend of September 20 is determined by the trader's response to the 50% level at $ 55.14.
The constant move below $ 55.14 indicates the presence of the seller. If this move creates enough downside momentum, sales could expand from $ 52.76 to a minor 61.8% level. This is a potential trigger point for accelerating to the main bottom at $ 50.48.
Withdrawing $ 50.48 will resume the downtrend to the next potential decline target of $ 45.05.
An optimistic scenario
Ongoing move above $ 55.14 suggests buyers' profits. If this move gives enough upside momentum, we can see a retest of $ 58.64, followed by a major 50% level of $ 59.29.
This week sentiment changed as oil traders shifted from optimism about falling supplies to pessimism about the possibility of increased supplies.
We are also in the news-driven market. Instead of being priced by weekly inventory data, traders are currently watching and responding to news about easing trade tensions between the United States and China, with the possibility that President Trump eases sanctions on Iran.
But since sanctions mitigation on Iran will have an almost immediate impact on supply, the progress of trade negotiations will be the most important event, since it will have a limited impact on demand until the actual trade transaction is announced. Nevertheless, it will take some time before the demand is actually strong.