Oil prices crashed in the early US session as reports came out that OPEC production in July was higher than the agreed quota.
Petro-Logistics reported that total OPEC production in the month of July was set to increase by 145,000 mbpd vs June and total production would exceed 33 mbpd which is in stark contrast to what the 14 member cartel had agreed upon. The rise was led by Saudi Arabia, UAE and Nigeria of which Nigeria had reported earlier that it would be unable to comply with the production cuts due to budget constraints.
OPEC is scheduled to meet along with other oil producing nations on Monday to decide on further action to support oil prices. OPEC decisions while hailed as a major step in boosting prices have been constantly under scrutiny as the member countries fail to comply with recommended production cuts. The market is expecting decisive action in the form on deeper production cuts from the attending nations to prop up prices in the short term.
The technical uptrend is currently distorted after the event driven decline in prices today. We are currently neutral on oil and expect the price to consolidate within the range of Rs.2,950-Rs.3,000, a breakdown below support at Rs.2,950 should turn the trend weak and call for declines to Rs.2,850 and possibly lower. The uptrend is expected to resume only on a break above key resistance at Rs.3,070 and we would then call for price objectives at Rs.3,150-Rs.3,200 in the short term.
Source: Commodity OnlinePrevious Next