The $58 level continues to play a role and provided some support several weeks ago as oil consolidated a little in that time and started to steadily move higher to reach the three month high. The $58 level supported oil very well for several weeks at the end of last year and is likely to continue to do so.
Starting at the beginning of October, oil fell sharply from its multi-year high above $86 down to its lowest levels in 12 months below $58 at the end of November before falling lower to 18 month lows a couple of weeks ago. For several weeks, oil was able to find some much needed support from around $58 and enjoy a reprieve from the immense selling pressure which has dominated it for the last couple of months prior, which is why this level is currently significant.
Several months ago oil hit the key level of $71 where it did receive some temporary support from, and likewise at $75 which propped up oil for a week. However both of those key levels gave way to immense selling pressure pushing it lower. Whilst not as significant as the current $58 level, the $71 level is likely to offer resistance should oil continue its rally higher. Oil enjoyed a very healthy August and September moving from that key $71 level to its highs before falling back to the same level. Just prior to this pronounced move up to its recent highs, oil was content to remain within its trading range between $71 and $75.
Oil prices have fallen after U.S. President Donald Trump publicly urged the Organization of the Petroleum Exporting Countries (OPEC) to lower the cost of crude, applying pressure on the Saudi Arabia led group to ease off on its price-boosting output cuts. “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!” the president tweeted earlier this week. President Trump was repeating his previous calls on OPEC to keep prices steady. Some analysts believe that this recent warning carries more weight, with U.S. legislators resurrecting a bill that would make the organization subject to antitrust laws in the U.S. Late last year, OPEC and some non-affiliated producers such as Russia agreed to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from growing. The world’s largest oil exporter, Saudi Arabia, recently estimated its production will fall in March by more than anticipated under the supply-reduction agreement, to 9.8 million bpd. Oil prices have also risen due to U.S. sanctions against oil exporters Iran and Venezuela.
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