Crude oil breakthrough likely, as Saudi leaves output cut unchanged

Crude oil breakthrough likely, as Saudi leaves output cut unchanged

US and Brent Crude trending points

  • US crude appears to having a breakout despite US supply surge
  • Brent Crude outlook volatile, hanging on a 2016-trend line with upside breakthrough wide open
  • After intense volatility, both crudes gained over 1 percent, as on yesterday, Saudi oil minister had swept away the possibilities of evading an output cut policy

US crude points towards a breakthrough, intense volatility ahead

Both US and Brent crude had been going through a sheer uncertainty over the past few weeks, and its narrow range has been suggesting a breakout ahead. Recent development in the crude oil price had been pointing towards a landmark breakthrough at any point, while an upswing remains wide-open, left well-supported by the OPEC output cut despite a record US supply surge.

Given last Friday’s (March 8th) semi-bullish market trend, a move higher seems to be probable, while it still needs further confirmation apart from Saudi oil minister’s hawkish stance in favor of OPEC production cut.

US crude daily price chart

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US crude daily price char

On the flipside, a break below Friday (March 8th) low at $54,37 per barrel for US crude would have the 52.30-51.30 area in focus. Either way, the crude oil price seems to be well-poised for further gains, while there could be a solid resistance ahead at $57.60 per barrel level. Further release of puissant intel for US or Brent crude price such as US supply surge could curb crude oil gains.

For the Brent crude, from a technical point of view, a long-term support level appears to be residing at $63.70-$62.70 territory, while a surge in the US crude price would also move the Brent crude price higher above the $69-$70 level.

While this report was being prepared, the US West Texas Intermediate crude was more than 1.30 percent up to $56.82, while Brent crude had also been up more than 1 percent to $66.23 a barrel, and further breach upside appears likely in a near-term outlook.

Bottom Line

From a technical perspective, the US crude seems to be well supported at $52.30 region, while its initial support level resides at $54.30 a barrel and the resistance level at $57.60. A daily breach of its initial resistance level could pivot US crude price above $60 territory.

For a safer trading, analysts had already predicted $52-$53 a safer zone for initiating a buying position when it comes to US West Texas Intermediate Crudes, while Brent Crude appears unlikely to breach below $63.30 level in a near-term outlook.

Looking ahead, this week could unleash an upbeat crude oil price, as Saudi Oil minister’s comment had boosted the investors’ sentiment, and US had urged the Indian Government not to purchase Venezuelan crude further, pointing towards a steep inventory decline, thereby an upsurge break of crude price ahead.

Read more on crude oil here

[Disclaimer: The content of this article is personal opinion and should not be considered as investment advice or suggestion towards any trading activity.]


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