Oil Worth Rally Triggers Overbought RSI Sign Forward of OPEC Assembly

Oil Worth Speaking Factors

The worth of oil breaks out of the vary sure worth motion carried over from the tip of January to commerce to a recent yearly excessive ($55.26), and key market themes might maintain crude costs afloat because the Group of the Petroleum Exporting Nations (OPEC) continues to control manufacturing in 2021.

Oil Worth Rally Triggers Overbought RSI Sign Forward of OPEC Assembly

The worth of oil clears the February 2020 excessive ($54.66) because itextends the upward development established in November, and the OPEC Joint Ministerial Monitoring Committee (JMMC) meeting scheduled for February Three might result in larger oil costs as Secretary Common Mohammad Barkindo insists that the group and its allies “stand able to take any mandatory actions.”

Nevertheless, recent knowledge prints popping out of the US might drag on the value of oil as crude inventories are anticipated to extend 0.367M within the week ending January 29 after unexpectedly contracting 9.91M the week prior, and indicators of slowing demand might encourage OPEC to control the vitality market all through 2021 as Saudi Arabia stays on monitor to scale back provide by 1 million b/d till April.

In flip, OPEC and its allies might proceed to emphasise its dedication to the Declaration of Cooperation (DoC) as “the return of stricter lockdown measures and rising uncertainties have resulted in a extra fragile financial restoration that’s anticipated to hold over into 2021,” and the value of oil might proceed to retrace the decline from the 2020 excessive ($65.65) as US manufacturing stays at its lowest stage since 2018.

With that stated, the technical outlook stays constructive as crude continues to commerce above pre-pandemic ranges, and the value of oil might proceed to trace the upward development established in November regardless that the Relative Energy Index (RSI) fails to point out an analogous conduct.

Oil Worth Day by day Chart

Supply: Buying and selling View

• Take note, crude broke out of the vary sure worth motion from the third quarter of 2020 following the failed try to shut beneath the Fibonacci overlap round $34.80 (61.8% growth) to $35.90 (50% retracement), and the value of oil might proceed to retrace the decline from the 2020 excessive ($65.65) as each the 50-Day SMA ($48.86) and 200-Day SMA( $39.74) set up a monitor a constructive slope.
• Crude has damaged out of the vary sure worth motion carried over from the tip of January to increase the upward development established in November, however the Relative Energy Index (RSI) has didn’t sustain as a break of trendline help emerged forward of February.
• Nonetheless, current developments within the RSI affords a constructive outlook because the oscillator climbs above 70, with the push into overbought territory more likely to be accompanied by larger oil costs just like the conduct seen earlier this yr.
• The Fibonacci overlap round $56.00 (23.6% growth) to $56.70 (61.8% growth) sits on the radar as the value of oil bounces again from channel help, with the subsequent space of curiosity coming in round $58.00 (50% growth) to $58.40 (23.6% growth).

— Written by David Music, Forex Strategist

Comply with me on Twitter at @DavidJSong