Crude Oil Under Pressure Again. Expect Producers’ Remarks Any Moment

After few weeks of gains due to the shortage in the US Crude Oil inventories, in addition to some OPEC meeting remarks, Crude Oil failed to stabilize and is nearing this year’s lows once again.

Since the beginning of the year, the price has been under pressure as there were not enough fundamentals to support the prices higher.

Moreover, the market is still oversupplied, and December’s production cut deal was already priced in in the market a long time ago.

Since there are no new fundamentals to support the prices, the downward pressure is here to stay. However, traders need to be aware that the producers are unlikely to keep watching the prices lower without intervening as OPEC did before.

• [Infographics] OPEC: Brief History and the Most Recent Facts

How The Intervention Looks Like

In March, when the prices declined sharply, OPEC and Non-OPEC members decided to spread the news to the market, that they are likely to extend December’s deal for another six months.

Such intervention has led to a notable recovery in both Brent and WTI Crude Oil. However, it was only for a short period of time, as the prices have been declining gradually since the beginning of April until today, despite the fact that the US inventories showed a continuous decline for the past four weeks.

They are likely to try once again and reassure the market that their next meeting is likely to end up with an announcement to extend December deal.

If this fails to support the prices once again, then an actual action will be required, such as cutting the production even more in addition to extending December’s deal. There is no third scenario.

Brent Below 200 DAY MA

Brent Crude failed to stabilize above its 200 DAY MA this week after it tried to stabilize above that solid support for an entire week last week.

Such close below the 200 DAY MA would deepen the downside outlook. However, the key support that traders need to keep an eye on is the $50 mark.

A breakthrough that support would clear the way for further declines, probably toward 49.30 and even $47.67.

Yet, the technical indicators are heavily oversold but haven’t crossed over to the upside as of yet, which keeps the downward outlook unchanged.

On the upside view, any possible rally is likely to remain limited, either below the 200 DAY MA which stands at 51.42 and/or the 50 DAY MA which stands at 53.16.

WTI Crude Nearing Key Support

The same story applies to WTI Crude, it has been declining gradually for almost a month, stabilized for a short period of time above its 200 DAY MA, but this week it failed to remain above it.

WTI tumbled on Monday reaching as low as 47.10 today, which is the lowest level since Mid-March of this year.

For the time being, traders need to keep an eye on this year’s low which stands at $47. This is the level when Crude rebounds right after OPEC and Non-OPEC remarks about a possible deal extension. Therefore, it is the next key support area.

A breakthrough that support would clear the way for a deeper correction, probably toward $46.35 followed by $44.90’s.

Yet, the technical indicators are heavily oversold but haven’t crossed over to the upside, which keeps the possibility for another leg lower ahead.

On the upside view, any rally is likely to be limited below the 200 DAY MA which stands at $49.02 maybe $50 key resistance area.

Otherwise, as long as OPEC keeps on sending remarks out with no action, the outlook is likely to remain on the downside.