U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on low volume early Monday. Light short-covering is behind the moves as some investors adjust positions on the thought that OPEC and its allies may soon announce another round of production cuts to stem the oversupply situation.
According to early reports, traders are expecting top exporter Saudi Arabia to push OPEC and other non-OPEC investors to cut supply towards the end of the year. The most difficult task, however, remains convincing Russia to go along with the plan.
Helping to keep a lid on prices are signs of lower demand due to the lingering trade disputes between the world’s two biggest economies, the United States and China.
In other news, U.S. energy firms added two oil rigs in the week to November 16, bringing the total count to 888, the highest level since March 2015, according to energy services firm Baker Hughes.
Additionally, money managers cut their bullish wagers on crude oil futures and options to their lowest level since June 2017, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
The hedge fund and commodity fund money managers cut its combined futures and options positions on U.S. and Brent crude during the week-ended November 13 to the lowest level since June 27, 2017.
Prices are being pressured by concerns over rising production and falling demand. This is reality. Production is rising, led by increasing output from the United States, Russia and Saudi Arabia, which now accounts for about a third of U.S. daily consumption. Signs of lower demand are beginning to emerge. On Monday, Japan’s Ministry of Finance reported that October crude oil imports fell by 7.7 percent from the same month last year, to 2.77 million barrels per day (bpd).
Unless these scenarios change dramatically today, WTI and Brent crude oil are likely to remain rangebound amid reports that OPEC is planning to announce the production cuts when it meets in Vienna on December.
For WTI crude oil, the important price range is $58.95 to $54.79. Holding inside this range means traders are sitting tight while waiting for the OPEC news. A bullish tone could develop on a sustained move over $58.95. The bearish move is likely to resume on a sustained move under $54.79.
The key area for Brent crude is $67.53 to $63.11. The short-term trend will be neutralized inside this zone. A stronger tone will develop on a sustained move over $67.53. A weaker tone will reemerge under $63.11.
This article was originally posted on FX Empire
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