Crude oil prices rose to a four-month high as the projected decline in US shale oil production signaled the global oil supply surplus will gradually disappear. The Energy Information Administration reported Monday that US shale oil output is projected to fall to 4.84 million barrels per day in May, which is its lowest level in nearly two years.
However, US domestic crude oil supply rose possibility as much as 1 million barrels last week, which is still near its highest level since 1930, Bloomberg reported.
The members of Organization of Petroleum Exporting Countries and non-OPEC oil producer such as Russia will meet in Doha, Qatar, on April 17 in order to discuss about the production freezing.
Saudi Arabia, which is OPEC’s largest oil producing country, said that they would agree to freeze output only if Iran takes part in the action, while Kuwait said that an agreement could be achieved even without support Iran. However there are an update that Iran and Russia might agree to the production freezing even if Iran does not take part in the action.
Oil price remains in upward trajectory for short-term to mid-term outlook. The oil price is testing intraday key resistance at 40.94. If the price managed to break the resistance, the oil price possibly will continue the rally up to 41.41-41.80.
Meanwhile, hourly stochastic and CCI are overbought. Correction may occur today. In that case, watch for bullish signal confirmation on a pull-back move to within the Fibonacci support area at 40.29-39.88 with target at 40.54 and 40.94 in extension.
Be careful if the price managed to break the support at 39.88 because it may turn the intraday bias to bearish and possibly will drag oil price lower to 39.60 or 39.23.