Crude oil, OPEC +, Delta variant, technical outlook – call points
- Crude oil will remain on its hind legs if OPEC uncertainty persists
- Time left to change production figures produced in August
- The technical attitude refers to the probability of a consolidation phase
Crude oil and Brent oil benchmarks have not recovered from last week’s decline unless the OPEC + deal reached a consensus to reject production cuts in August. The oil cartel and its allies have reduced production cuts due to the pandemic in recent months as the global economy recovers.
The United Arab Emirates (UAE) wanted a revision of the base figure used to calculate the initial cuts to allow additional oil sales. People familiar with the dispute claim that the Gulf state wants to take advantage of current prices and sell as much oil as possible, writes The Wall Street Official Journal. This leaves a large blind spot in forecasting energy markets in the near future, and some suggest that it shows cracks in the strength of the oil cartel as an organization.
If the deal cannot be agreed in the near future, there is no choice but to abandon the planned increase in production of 400,000 barrels per day in August due to the time required to conclude sales contracts between countries and suppliers. Background discussions are likely to take place to resolve the issue quickly. The White House has also made public statements to release more oil.
On the demand side, the Covid Delta variant is also a cause for concern, as South-East Asia is trying to curb the spread of a new strain of the virus. The daily increase in the number of cases from Australia to South Korea is likely to be a headwind in the near future. Low vaccination rates force policy makers to do more than implement economically crippling closures. Australia’s vaccination rate is below 10%, far from the United States.
Technical forecast of crude oil
The technical attitude of crude oil reflects the uncertainty in the markets. Prices pulled back from a fresh six-year high last week. The 26-day exponential moving average (EMA) supported last week’s decline and could do so even if prices fall below current levels by 38.2% near the Fibonacci retracement level of 74.23. The recent rise of 76.98 is likely to be resistance. Consolidation may be in reserve until the catalyst is reached.
8-hour crude oil schedule
The chart is created using TradingView
CRUDE OIL COMMERCIAL ASSETS
– Written by DailyFX.com analyst Thomas Westwater
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