Oil Weekly Review 21st – 25th Nov 2016

Summary:

OPEC’s Disarray

Brent fell 3.6% to $47.21/bbl and WTi fell 4% to $46.06/bbl during Friday’s trading session following a weeklong bullish rally. The swift change of sentiment is largely accredited to Saudi Arabia decides to pull out of planned talks with non-opec nations including Russia to discuss limiting supply, OPEC sources said, as Saudi Arabia wants to focus on having consensus within the organization first before presenting the agreement to non-opec countries.

Russia still plans to attend lower-tier talks on Monday, Nov 28th in Vienna ahead of the OPEC ministerial meeting. Monday’s talks will mostly focused at resolving OPEC’s internal differences before the ministerial gathering on Wednesday, Nov 30th.

Despite extensive diplomacy, the OPEC side of the deal still faces setbacks from Iraq’s call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.

A meeting of OPEC experts this week made some progress in how to implement the cut, but Iran and Iraq raised conditions for participating, according to sources.

Various reports also state that oil giant Saudi Aramco would increase oil supply coming January to some Asian customers also cast a shadow on markets, traders said.

A decline in China’s October crude oil imports to their lowest on a daily basis since January added to the bearish tone.

The Trump Effect

Market participants have been weighing the potential impact the Trump administration will have on the energy sector, as his plan to ease federal restrictions on oil drilling would benefit some in the oil industry, but likely further add supply to an already glutted market over time – weighing on prices.

President-elect Trump pledged to “cancel job-killing restrictions on the production of American energy”, including shale. “President-elect Trump’s policies will have an impact, but they will not be immediate, said James Williams, energy economist at WRTG economics. Still the impact of President-elect Trump’s policies in the oil market may become evident in the second half of next year, he said.

With President-elect Trump aiming for U.S. energy independence, OPEC could revert to protecting its market share, instead of working to temper the global supply overhang.

Overall, analysts said fundamental were little changed – apart from concerns over the fate of next week’s deal.

Most analysts expect some form of cut, but it is uncertain whether that would be enough to prop up a market dogged by oversupply since 2014.

Source:
http://www.zerohedge.com/news/2016-11-23/opec-playing-oil-markets-again
https://www.bloomberg.com/news/articles/2016-11-24/russia-tries-to-dress-up-oil-freeze-as-cut-amid-opec-pressure
http://www.worldoil.com/news/2016/11/24/iea-report-warns-on-flexibility-of-global-lng-market
http://www.zerohedge.com/news/2016-11-24/trump-opec-game-theory

Technical Analysis summary

Going into trading next week, market sentiments remain mostly neutral and as do mine.

Brent Daily (Bearish Setup)

Price is currently at role reversal area and 47 psych level. Look for a break below this area and a retest for ideal place to go short with short-term target at next level of daily support or 42 psych level. Fib Projected Target would be at 40 Psych level.

Brent Daily (Bullish Setup)

Price action is making series of HH HL and currently sitting at role reversal area and 47 psych level. I'd drop into smaller tf and look for signs of reversal to go long with target at 50 psych level or 138.2 Fib Target

WTi (Bearish Setup)

WTi is very much similar to the Brent chart I posted earlier. Price is at role reversal area and 46 psych level . Look for a break below this area and a retest for ideal place to go short with target at next level of daily support or 43 psych level. Fib projected target would be at 40 psych level.

WTi (Bullish Setup)

Price action is making series of HH HL and currently sitting at role reversal area and 46 psych level. I'd drop into smaller tf and look for signs of reversal to go long with target at 49 psych level or 138.2 Fib Target.

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