After the rise achieved in recent sessions, the WTI oil price seems to have reversed course. Apparently the bearish traders seem to take advantage of the strengthening of the US dollar and the increase in US bond yields but, in reality, behind the change of pace in the oil price, there could be OPEC and this for an almost paradoxical reason .
Usually, in fact, when one thinks of a role for OPEC, one immediately thinks of bullish factors, certainly not bearish indications.
This time it seems to have happened just the opposite. The position taken by the Saudi Arabian Minister of Energy, Abdulaziz bin Salman, against market speculators it would seem to have had the opposite outcome compared to what was hoped: support for the bearish movement instead of pushing for the green. Evidently there is someone who is well aware of the limits of OPEC’s action and who therefore has decided to teach the Saudi representative a “lesson”. What limits are we talking about? Not everyone knows it, but if it is true that OPEC is scary when it decides to cut production, it is equally true that, often, the targets for cuts are not only not reached but are even exceeded!
All this while, according to the latest data from the EIA (Energy Information Agency), the oil stocks decreased markedly, thus offsetting the strong increase of the previous week. Coming to the numbers, in the week ended May 19, 12.456 million fewer barrels were stored, while the previous week there were 5.04 million more barrels.
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Oil price compressed within a range of 10 dollars
The price of WTI oil, as can also be seen from the charts above, is in the $73 area. Having exhausted the flare-up of the past few days, the quotations have returned to fluctuate in that range between 73/72 dollars and 83/82 dollars. It is in this range that oil prices have been moving for some time.
In this context, a possible breaking the 72 dollars it could also pave the way for a return to lower levels in the $70 area before and even to $64 if the negative trend continues.
In reality the situation appears quite volatile and if it is true that c‘is the risk that crude oil will remain at current levels for a certain period of time, nor can it be excluded that the decline may not last long.
From a purely technical point of view it is clear that oil could soon start a new bearish phase having seen that the lower limit of the supply area at 74.52 dollars has been reached. If the day ends lower, WTI could continue on its current move.
Once you have achieved the bullish target it is very probable that short and medium-term shorting could prevail and in this case the first target would be 72 dollars a barrel.
From the above, it is quite clear that volatility will accompany the movement of oil in the near term. The range is the $10 range where oil moves forward, backward and forward again.
A situation that can be exploited to trade crude oil through derivative instruments such as CFDs which do not involve the purchase of the underlying asset.
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