In the scenario of a lower crude oil inventory and Opec and Russian Crude Oil Export cuts, we identify a trading opportunity for a long-term position. Brent crude oil could move back to the moving average levels of $53/ bl to then reassume a .
The crude oil market continues oversupplied just three weeks after the OPEC meeting where members countries agree to reduce production by 1.2 million barrels per day in January 2017 subject to a commitment from Russia to cut production. Since then, it appears that Saudi Arabia and Russia continue producing at records levels whilst US inventories continue being a hot indicator for traders and investors. On Tuesday, December 19, the American Petroleum Institute’s ( ) weekly report indicated a substantial draw in the US crude oil commercial stock levels. Today the U.S. Energy Information Administration ( EIA ) on its weekly petroleum report surprises the market with an increase of 2.25 million barrels.
Regardless of the inventory level, the market seems to seek an upward trend. However, different indicators suggest a short trade with the crude oil weakening to levels close to the moving average where triple tops test a relevant price level. In the long-term, we see crude oil price to bounce back and resume the channel drew by the trident .
Our predictive model was accurate in identifying the price trend. The QuantVox report from 21 December 2016 foresaw the current price level. Current prices trading around the central line on the trident. Now it is time for an update to our models and looking ahead for our next publication.