Oil finds support following EIA release

WTI appears to be reversing course since the beginning of the week and moving higher, following the release of $9.604M barrels of oil by the EIA. In this report, we aim to shed light on the factors driving WTI’s price, assess its future outlook and conclude with a technical analysis.

OPEC and Guyana

According to news reports OPEC and Guyana where in talks this week for the country to participate in OPEC meetings. By participating in meetings, it could be seen as a stepping stone before joining the group itself, a move that could potentially allow the group to increase control over the global oil market through tightening their grip on the supply of oil. Interestingly on Thursday a Canadian oil company named CGX announced that it had made a significant discovery of oil on the coast of Guyana, at the Corentyne block located 100 nautical miles from the coast of Georgetown. The development appears to be elevating the region’s status as an oil producing nation, which could be tied to the attempts made by OPEC to include the nation in its deliberations. However, it is important to note that the country’s Vice President had stated that the country was not interested in joining OPEC, therefore striking down any speculation that Guyana would be joining the group, for now.

US EIA releases 9.6M barrels of oil into the market

On Wednesday, the EIA released 9.604M barrels of oil into the market, vastly exceeding market expectations of a release of 1.757M barrels. The much higher than expected release, appeared to be indicative of a continued tight oil market, with demand appearing to remain strong despite early indications of a slowdown in the US economy. However, we note that tomorrow’s financial releases during the Asian session, could heavily influence the price of oil. During tomorrow’s Asian session, market analysts are anticipating China’s NBS Manufacturing PMI figures which are expected to shed light on China’s limping economy recovery. In the event that the PMI figures are indicative of a deterioration in economic activity, we may see the price of oil declining, whereas should it be indicative of an expansion, it may provide support for oil’s prices, as China is the world’s largest oil importer.

Norway announced $18.5 billion worth of new oil and gas projects

Norway announced 19 new oil and gas projects on the country’s continental shelf, investing approximately $18.5 billion to facilitate the expansion of existing fields and the creation of new ones. The new projects according to the Government, is in order to facilitate Europe’s energy needs in the long run, thus decreasing the continents dependency on countries which may be considered as malignant. However, following the announcement, the Government was sued by environmental groups, who are seeking an injunction on the projects, claiming that Norway has violated a 2020 Supreme court ruling, that requires the Government to assess global impacts on the environment from field developments. In conclusion, should Norway continue to expand its oil and gas fields, we may see a long term increase in price of oil, as the expansion could signal expectations of higher demand in the long run, despite climate pledges to reduce dependency on non-renewable sources of energy.

技术分析

WTI Cash 4H Chart

• Support: 67.65 (S1), 66.05 (S2), 63.00 (S3)
• Resistance: 70.15 (R1), 72.50 (R2), 75.15 (R3)

WTI seems to be moving in a sideways fashion, after having broken below last week’s upwards moving channel. We tend to maintain a neutral outlook for oil and supporting our case is the formation of a sideways moving channel since the 23   of June, the RSI indicator below our 4-Hour chart currently registering a figure at 50, implying a neutral market sentiment, in addition to the narrowing of the Bollinger bands, implying 低 market 波动率.

For our neutral outlook to continue, we would like to see the commodity, remaining confined in the sideways moving channel, formed by the boundaries of support at 67.65 (S1) and resistance at 70.15 (R1). For a bullish outlook, we would like to see a clear break above the 70.15 9R1) resistance level, with the next possible target for the bulls being the 72.50 (R2) resistance ceiling.

On the other hand, for a bearish outlook we would like to see a clear break below support at 67.65 (S1) with the next possible target for the bears being the 65.05 (S2) support level. However, we note that China’s NBS Manufacturing PMI figures for June, due tomorrow could heavily impact oil’s direction.

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