Investors are wondering where the bottom is. Will oil prices fall again? In today’s WTI full cycle analysis we will look into fundamental and technical aspects of crude oil prices and define possible entry levels for WTI crude oil. But, if you are working for an oil company or live in any oil producing country the result might not make you happy.
According to the press release from the Saudi Oil minister Ali Al-Naimini in Doha, Qatar, both Russian and Saudi Arabian ministers came to an agreement to put a cap on ever-lasting increase in crude supply and limit it at January 2016 production levels. An average trader is likely to cherish such move and dive in the market that yes finally there is a production cut, however the reality is rather different . Russia and Saudi are not going to cut the production, they just will not be increasing their already high production thus this is not going to create any crude shortage in the market.
To give you an idea, while in 2014 average daily crude production was 30.77 million barrels, in 2015 this number rose to 32.33 million barrels from OPEC countries alone. This is 1.56 million barrel production increase YoY. Meanwhile Russian crude oil production is at its 25 year high.
Nigeria cannot find Oil buyers
Nigeria, the main oil supplier in the African continent is having trouble finding buyers for their March contracts as some 25% of the production is still unsold.
Based on commodity traders reports, we can see that the bid and ask prices differ by some 28%, buyers are bidding substantially lower than what the traders are asking for.
Crude oil sell positions
Based on current market environment, we can expect to see Crude oil dipping further down may the support at $28.60 zone be broken. Meanwhile, there is a possibility that the black gold could retrace a little upwards before dipping further down. Nonetheless the following are our trade calls for WTI Crude oil for today:
- Crude oil – WTI SHORT (SELL Stop) @ 28.58, SL@ 29.05, TP1@ 28.28, TP2@ 27.74, TP3@ 26.84
- Crude oil – WTI LONG (BUY Stop) @ 30.20, SL@ 29.80, TP1@ 30.67, TP2@ 31.31, TP3@ 32.01
You can also watch the crude oil video analysis for visual levels.