Even with conflicting fundamentals about oil, the commodity has rallied strongly in the past few days. With a potential to rally much higher, the question is can we see a $60 per barrel oil surge in coming days?
13 February, AtoZForex – Oil prices have had an interesting movement lately. Despite a strong build in crude oil stockpiles in the US, the “black gold” has managed to rally nicely in the past few days. The market seems to be reacting more to upbeat data from the Organization of Petroleum Exporting Countries (OPEC), which showed a high level of compliance in terms of the agreed output cuts from member countries.
According to the United Arab Emirates Energy Minister, compliance with the global supply cut deal by OPEC and non-OPEC oil producers has been high in January and that level of commitment is expected to improve over the next months.
“The first month I see the commitment around OPEC has been there from the various independent sources. The level of commitment is high and we are expecting to see more commitments in the months to come,” Suhail bin Mohammed al-Mazroui told reporters.
Reports show that the oil cartel has adhered to 90 percent of pledged oil output cuts in January, marking a strong and promising start to the production cuts of 1.8 million barrels per day (bpd) during the first half of 2017 in order to rein in a global glut, the first cut in eight years.
There is still a downside risk, in that US drillers added eight oil rigs in the week to Feb. 10, therefore bringing the aggregate US count to 591, the most since October 2015. This time last year, when oil prices were around $30 per barrel, there were just 439 active rigs.
$60 per barrel oil surge in coming days?
Looking at the daily chart, we can see Brent has been in a range lately, forming a bullish flag. Hence, a breakout in either direction could take prices to phenomenal levels. I have a slight bias towards a bullish breakout. Zooming to the intraday charts on the 1hr, the price has already formed a bullish candlestick and could potentially ignite a strong rally on the pair.
This could lead to a breakout on the daily time frames, leaving us with the question, can we see $60 a barrel in coming days?
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