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UK Oil - Steady Under Key $63 Level as OPEC Lowers Forecast



UK Oil - Steady Under Key 63 Level as OPEC Lowers Forecast
In the last week or so, UK Oil has steadied under resistance at the key $63 levels after moving well in the previous week off support at $60. It has now traded between $58 and $63 for the most part of the last two months as it has tested the latter level again in the last week. Selling has been steady at anything above $63 indicating how significant this level is presently.

Prior to its recent steady move higher it had fell sharply from a three month high above another key level in $68 which has provided some resistance in the last three months, which it reached after an incredible surge higher.

Just prior to the surge it has eased back towards the key $60 level, as throughout most of August UK Oil traded within a narrow range mainly between $58 and $60 with the former level providing some support, as it has done again recently. Should the $58 support level give way however, there is no obvious support level until around $50 where it reversed at the end of last year. At the beginning of August, UK Oil fell sharply back through the key $63 level, and then relied on support from $58 to remain and keep prices propped up.

It had been enjoying solid support from the $63 level for more than one month before the strong fall. Its current key level of $68 provided stiff resistance which throughout June and July. In early June, oil did well to consolidate by trading in a narrow range roughly between $60 and $63, after falling sharply in the few weeks before. Throughout the second half of May oil fell sharply from around the key $71 level down to its lowest levels in four months below $60, before a subsequent rally.

In its anticipated annual World Oil Outlook, the Organization of the Petroleum Exporting Countries (OPEC) has revised its forecast lower for global oil demand growth over both the medium-term and long-term.  In its report, OPEC stated that the last year has been “challenging” for energy markets highlighting “signs of stress” in the world economy and tough market conditions.  “Signs of stress have appeared in the global economy, and the outlook for global growth, at least in the short- and medium-term, has been revised down repeatedly over the past year,” OPEC said.  OPEC said its own production of crude oil is expected to decrease during the next five years, falling to 32.8 million barrels per day in 2024, down from 35 million this year.  “We see a continuous surge, if you like, of non-OPEC supply, led by tight oil from the United States, and to some lesser degree, Canada, Brazil, Norway, Kazakhstan and other non-OPEC countries,” OPEC Secretary-General Mohammad Barkindo said in an interview.  “We have already started seeing a deceleration of growth in the United States. The shale patch in the U.S. is facing a tremendous amount of headwinds as a result of the unprecedented growth that we have seen in the last couple of years,” Barkindo said.

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The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way.

This post was written by Graeme Watkins

CEO Valutrades Limited, Graeme Watkins is an FX and CFD market veteran with more than 10 years experience. Key roles include management, senior systems and controls, sales, project management and operations. Graeme has help significant roles for both brokerages and technology platforms.