The trading week started with a strong oil prices growth, the Brent listings reached the maximum from the July, 2015, rising above the level of 57.00. The OPEC and 11 non-OPEC countries have come to the agreement of the oil producing limitation by 558K barrels per day, and this supported the price greatly. The oil Minister of Saudi Arabia declared the possibility of further limitations unilaterally. This brought some optimism on the market, and the middle term targets increased. Today the level of 65 dollar per barrel is the strong support level.
The market is favorable for the “bulls” now. If all the participants follow the agreement fully, the world extracted oil resources will reduce by 46%, which will make the price to grow. On the other hand, the countries have violated such rules many times. In addition, the USA can prevent the oil prices from growing, as they can increase the production of the shale oil, reopening the wells, declared as unprofitable. So the traders are waiting for the realization of the agreement, remains optimistic.
Support and resistance
The price was corrected to the level of 55.24 and now is trying to grow. In case of the breakup at 56.46 the nearest targets will be at 57.10 (December maximum), 58.00 and 58.80. The indicators show the possibility of the growth, too. The price is moving within the upper border of the Bollinger Bands, which is pointed upwards and shows the upward trend, too. The Stochastic is reversing upward, the MACD histogram is growing in the positive area. The continuing of the downward correction to the level of 53.50 (Fibonacci correction 23.6%) and 51.50 (Fibonacci correction 38.2%) is less possible, as the price should consolidate below the 54.80 to develop it.
Support levels: 54.80, 53.50, 51.50.
Resistance levels: 56.45, 57.10, 58.00, 58.80, 60.00.
Open long positions when the price is set above 56.45 with the target at 57.10, 58.00 and 58.80. Stop loss is at 55.90. Open short positions below 54.80 with the target at 53.50, 51.50 and stop loss at 55.40.