Global macro overview for 26/01/2017:
Despite the agreement on production cuts signed by OPEC members and other major oil producers in December 2016 in an attempt to raise prices, their efforts could be derailed as US oil production is on the increase. The Crude Oil Inventories data released yesterday indicated that crude oil stockpiles rose in the US for a third consecutive week. More US shale producers have commenced operations as oil prices remain above the $50 level. Market participants expected a decrease in US stockpiles from 2,347k barrels to 1,500k barrels, but instead of that, the stockpiles increased by 2,840k barrels. On Sunday, OPEC announced that 1.5 million barrels had been taken out of the market, out of 1.8 million agreed under the recent production pact between OPEC and other oil exporters. In conclusion, if US production continues to rise and offsets the cutbacks announced by OPEC, oil prices could head lower.
Let's now take a look at Crude Oil technical picture in the 4H time frame. The technical resistance at the level of 53.50 has been tested five times already and still hasn't been violated. It might indicate a strong resistance level, so the prices might go lower towards the next important support at the level of 50.90.
The material has been provided by InstaForex Company - www.instaforex.com