Oil price remains above $40/bbl at European session as a strike in Kuwait has reduced the country’s oil production almost 50%. This fact reduces the worries the negative sentiment after the meeting in Sunday failed to reach an agreement on production freezing.
The strike that involves thousands of oil workers in Kuwait reduces the oil production to 1.5 million barrels per day, according to the KUNA spokesman. The number is half of Kuwait’s average daily output at 2.8 million barrels in March.
The protest in Kuwait would support the oil price for a while. However once the strike ends, the investors’ focus would be back on the oversupply problem.
The oil price currently is in upward trajectory and testing the intraday key resistance at 42.66. If the oil price managed to break the resistance, the rally may continue up to 44.03-45.20. Note that hourly stochastic and CCI are overbought, therefore beware of possible correction.
As alternative strategy, watch for bullish signal confirmation on a pull-back move to within the Fibonacci support area at 40.73-39.54 with 41.47 as target and 42.66 in extension.
Be careful if the price managed to break below the support at 39.54 because it will turn the intraday bias to bearish and possibly will be followed by a bearish move to 38.69-37.61.