Crude Oil: Venezuela Sanctions and OPEC drive the market
Our latest setup reached the subtarget. - See attached -
Fundamentals:
Sanctions to Venezuela: The U.S. plans to impose sanctions on Venezuela oil exports: The U.S. already has a variety of sanctions in place on Maduro and his supporters, but it has refrained from sanctioning Venezuela’s oil. This could change. The country’s oil is primarily heavy sour crude which is often mixed with other types of oil for processing. If Venezuela is removed as a source of heavy sour crude, the price of this type of oil will go up. In fact, according to Reuters, the price of some similar grades of crude oil went up by $6.25 on Tuesday. Some analysis says that if these sanctions happen, the refineries in the Gulf of Mexico that use Venezuelan oil would face higher costs. If they have to run at less than full capacity, we could even see increases in gasoline prices in some places.
Latest OPEC News: OPEC’s Barkindo says leading oil producers cut supplies aggressively to avoid inventory buildup. OPEC Secretary General Mohammad Barkindo said that OPEC+ could take further action at their next meeting in April. “We have seen aggressive cuts by leading producers to avoid a resurgence of inventories of Q1. We are pretty satisfied with the response of the market,” Barkindo added to support today’s recovery.
In addition to the warnings for 2019 global growth and disappointingly weak economic data from China, EIA report showed 8M barrel increase in the Crude Oil Stocks in the US.
Although this data seems to have capped the WTI’s upside, for the time being, markets are likely to remain focused on political developments in Venezuela, which could continue to provide a lift to crude oil prices.
Technical Overview:
As seen on the H4 Chart, Crude Oil prices are trading above EMA50 and Ichimoku Cloud. The upside is capped by 54.70 resistance. A clear break of the resistance would open the gate to 56.25 historical level.
Key Levels:
Upside: 54.70 55.47 56.25
Downside: 53.13 52.34 51.56
An H4 closing above 53.91 would confirm the test of 54.70.
Price needs to make H4 closing below 53.13 to turn downside.
Fundamentals:
Sanctions to Venezuela: The U.S. plans to impose sanctions on Venezuela oil exports: The U.S. already has a variety of sanctions in place on Maduro and his supporters, but it has refrained from sanctioning Venezuela’s oil. This could change. The country’s oil is primarily heavy sour crude which is often mixed with other types of oil for processing. If Venezuela is removed as a source of heavy sour crude, the price of this type of oil will go up. In fact, according to Reuters, the price of some similar grades of crude oil went up by $6.25 on Tuesday. Some analysis says that if these sanctions happen, the refineries in the Gulf of Mexico that use Venezuelan oil would face higher costs. If they have to run at less than full capacity, we could even see increases in gasoline prices in some places.
Latest OPEC News: OPEC’s Barkindo says leading oil producers cut supplies aggressively to avoid inventory buildup. OPEC Secretary General Mohammad Barkindo said that OPEC+ could take further action at their next meeting in April. “We have seen aggressive cuts by leading producers to avoid a resurgence of inventories of Q1. We are pretty satisfied with the response of the market,” Barkindo added to support today’s recovery.
In addition to the warnings for 2019 global growth and disappointingly weak economic data from China, EIA report showed 8M barrel increase in the Crude Oil Stocks in the US.
Although this data seems to have capped the WTI’s upside, for the time being, markets are likely to remain focused on political developments in Venezuela, which could continue to provide a lift to crude oil prices.
Technical Overview:
As seen on the H4 Chart, Crude Oil prices are trading above EMA50 and Ichimoku Cloud. The upside is capped by 54.70 resistance. A clear break of the resistance would open the gate to 56.25 historical level.
Key Levels:
Upside: 54.70 55.47 56.25
Downside: 53.13 52.34 51.56
An H4 closing above 53.91 would confirm the test of 54.70.
Price needs to make H4 closing below 53.13 to turn downside.
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