Oil: sliding down

Oil: sliding down

2020-02-04 • Updated

Still bright?

“2020 looks like it has upside potential that will also defy some of the gloomy predictions” – these were the words of the OPEC Secretary-General Mohamed Barkindo in November. He added that time that he saw brighter spots in the nearest future for the cartel.

A month later, during the OPEC meeting on December 5, it was decided to cut the output by 500,000 bpd for the first quarter of 2020. The general impression of that meeting provided little optimism on behalf of the OPEC to the journalists. In fact, there were hardly any official comments at all.

Now, OPEC and its strategic ally Russia are considering to hold an emergency meeting to address the weak oil demand from China resulting from Coronavirus counter-measures. The original time when the cartel was planning to gather for discussion was March, then the date was moved forward to February 14. Eventually, it may be set even earlier as observers report.

Oil into the fire

To put things in context, here are some additional facts. As of February 2020, Libya has cut its oil output by approximately 80%. The price should have increased because of that, but didn’t, eventually. At the same time, the oil production has reached its new records both in Russian and USA – which means there will be more tension between the US and OPEC+ as both gain more weight but have almost opposing interests.  

What does the chart say?

It says things don’t look good for the oil price. Or they do – depends on who is seeing this. For OPEC obviously it’s bad: the cartel’s member countries are oil-dependent, and the oil price heavily contributes to the county income. The lower the price is – the lower the county income is. Entire political structures and domestic economies may tremble because of this alone, and it happened already.

The oil price broke the level of $57 recently (for Brent) – the level that has been the support for its movement through 2019. The three-years support of $50 is not that far away – meaning it’s almost where it was before the US-China trade war. Sounds quite alarming; and it should – at least, for the countries which have oil as the main state profit contributor.

Brent_OilWeekly.png

Conclusion

We are far from seeing stability in oil prices, so you can use it and make profit on that. In addition, trading oil is a good diversification and additional to currencies.

                                                                                       LOG IN

Similar

WTI and Brent React To a Key Pivot
WTI and Brent React To a Key Pivot

Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...

XBRUSD: Prepares to Correct Intraday Rally
XBRUSD: Prepares to Correct Intraday Rally

Bearish Scenario: Sales below 80.00 with TP1: 79.34, TP2: 78.94, TP3: 78.55, and 78.00 Bullish Scenario: Buys above 78.00 (wait for a retracement to the zone) with TP: 79.34 TP2: 80.00, and TP3: 81.00

Latest news

XAUUSD: Bears Prepare To Takeover
XAUUSD: Bears Prepare To Takeover

On Friday, the gold price (XAUUSD) retreated from a recent two-week high, facing selling pressure. This decline was driven by hawkish minutes from the FOMC meeting, indicating the Fed's reluctance to cut interest rates. Elevated US Treasury bond yields, supported by a "higher-for-longer" narrative, further weakened demand for gold...

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera