Vang SJC

U.S oil price moved in small range on Wednesday because the market is ahead of OPEC meeting and EIA oil stock.

On Wednesday, at 16:11 (GMT+7), WTI prices traded at $48.20/barrel, nearly unchanged with the open price, with high and low of $48.49 and $47.93/barrel.wti-d1-23-4

Fig WTI D1 Technical Chart

Fundamental Analysis

  • Oil supply:

Today, WTI fell down partly due to the concerns that OPEC cut agreement would be hard to reach. In the past two days, the market was quite optimistic that 14 OPEC members might be successful in achieving oil production curb deal, which drove the oil to the highest level of this month. However, the market is currently showing some worries about OPEC meeting in November 30th.  It still remained uncertain whether Iran and Iraq are willing to involve in this agreement or not.

API released its oil stock estimates on Tuesday, showing a 1.28 million barrels decrease last week. Oil stock in the previous week was estimated to increase 3.65 million barrels.


Fig API oil stock 1Y Chart

The market is awaited for official data on Wednesday, when Energy Information Administration is scheduled to publish data on weekly crude oil inventories. U.S oil stock has risen for 2 straight weeks, with 5.3 million barrels in the week ended in November 13th, and 2.4 million barrels in the week ended in November 6th.  Oil inventories last week is expected to rise just 0.3 million barrels.


Fig EIA oil inventories 1Y Chart

In addition, President-elect Donald Trump launched a video yesterday, outlined a plan on his day one in the office. Besides some issues involved trade deals and immigration, he announced that he would remove some restrictions on energy industry, which encourages U.S oil production in the future.

  • Oil demand

Oil price is largely affected by China’s economy because China is one of the countries that have largest oil consumption. However, recently, some important economic indicators have shown that the economy was slowing down. China GDP growth in Q3 was 6.7%, in line with two previous quarters. Besides that, China retail sales in October rose 10% from a year ago, disappointing the expectation of 10.7%.

However, according to EIA World Energy Outlook 2016, oil demand is forecast to grow in several decades due to high consumption of diesel, fuel oil and jet fuel.

  • The value of U.S dollar:


Fig USDX D1 Chart

U.S dollar continues the strong uptrend after taking breath on Monday. USDX reached 101.00 at 13:26 (GMT+7), a little than Tuesday close of 101.04.

The dollar have been boosted for several days because the market expected increasing fiscal spending and tax cut under Trump administration would encourage economic growth. Besides that, on Tuesday, U.S released data on monthly existing home sales, which shows positive economic outlook. This figure was $5.6 million in October, beating the expectation of $5.43 million and higher than the figure of $5.49 million last month. It would strongly support the market expectation of Fed rate hike in December, strengthening the greenback.

As oil is dollar-priced commodity, the strength of greenback has a huge effect on “black gold” price.

Technical Analysis


Fig WTI D1 Technical Chart

The distance between MA 10 and MA 20 contracted and seems to be cross each other. In addition, both MAs are still far below the price line.

The difference between faster MACD and lower MACD is geting smaller.


Fig WTI H4 Technical Chart

As shown on the H4 chart, the last candle showed a little change with a short body and nearly no shadows, indicating that buying and selling pressure are acting quite indecisiveli.

After almost touching the lower boundary in Bollinger band, the price line is now increasing back to the middle of the band.

ADX (14) was 32.2440 and headed downward. +DI and –DI were almost the same, signaling the market was quite balance.

Analyses of Group Fiinvesting

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