Oil field. Image source: Song Qiuju © 123RF.com
The energy market was slightly jolted at the beginning of this week, following the conclusion of the 11th OPEC and Non-OPEC Ministerial Meeting last Saturday. The price of crude oil fell by 3$ per barrel on renewed investors' fears over a potential new supply glut.
In the Minutes report that was published on OPEC's website after the meeting, it was stated that member and non-member states continue to abide by the accords for production cuts that were reached during the previous (extraordinary) meeting, as countermeasures to offset the impact of the coronavirus fallout.
Even though global demand for crude is on the rise once again as governments gradually ease their containment restrictions and economies are allowed to reopen, OPEC and OPEC+ still estimate that aggregate demand would fall by around 9mb/d for the entire year.
This is one of the two reasons as to why energy investors' fears prevail, despite the evident stabilization that has taken place in the market over the last several weeks.
Primarily, their fears stem from the possibility that the Ministerial Committee's attempts to drive down production may not be sufficient to offset a potentially bigger drop in global demand.
Moreover, there is a genuine likelihood that not every country manages to meet the proclaimed target cuts. This would mean that, in reality, the aforementioned supply glut would continue to widen, despite the touts of OPEC and OPEC+ concerning the size of their production cuts under their agreement.
" In view of the current fundamentals, and following the agreement reached at the 179th Meeting of the OPEC Conference, all Participating Countries: […] Subscribed to the concept of compensation by those countries who were unable to reach full conformity (100 per cent) in May and June, with a willingness to accommodate it in July, August and September, in addition to their already agreed production adjustment for such months."
So far, it is uncertain as to what the size of such a potential rift might be. This is the primary reason for the emergence of the current bearish correction.
The downturn might be bolstered if it is announced that there are huge discrepancies between the agreed-upon production cuts and the actual size of the realized cuts.
From a purely technical standpoint, however, the bearish correction is unlikely to be protracted for too long.
As can be seen on the 4H chart below, the correction was initiated from the psychologically important resistance level at 40.00.
This was the price action's first attempt at breaking out above it, which means that very probably it will not be the last.
The crossover of the 10-day EMA (in blue) below the Bollinger Bands' middle line confirms the strength of the bearish momentum that is exhibited on the MACD below.
The short-term correction is likely to be concluded once a new dip is reached, which, in turn, would allow the market bulls to use this new swing low to enter long at a discount.
A likely contender for such a reversal point is the minor support level at 34.50.
Crude Oil 4H Price Chart. Image source: Trendsharks ©, created with TradingView.com
Over the past few weeks, the USD has lost nearly 800 pips against the JPY, driven by Japan's shift away from decades of negative interest rates. With the Bank of Japan raising rates for the second time in a row, investors are adjusting their positions to [...]
Despite its volatility, Silver remains in an uptrend. While not as dynamic as Gold, XAG often mirrors XAU’s movements. A Multiple Top has formed around $32.50, and history shows that the more a level is tested, the weaker it becomes, increasing the likelihood of a [...]
A combination of factors, including Trump-era tariffs, the emergence of DeepSeek, and a slowdown in GDP growth, has contributed to the recent pullback in the US30 from its record highs. From a technical standpoint, a Double Top pattern has formed around the [...]
Over the past month, Silver has experienced an impressive 13% surge, marking a strong bullish trend. Despite notable volatility and multiple pullbacks, the overall momentum remains firmly to the upside. This strength is further validated by the Golden Cross, a historically reliable [...]
The Swiss Stock Market has been on a remarkable rally, surging over 15% between December and January. At times, the price action resembled a near-vertical ascent. However, following the announcement of Trump’s tariffs over the weekend, Monday’s trading session opened with a [...]
Between October and January, GBPUSD experienced a significant decline, dropping by approximately 1300 pips. However, we now observe signs of a potential trend reversal. Over the past few weeks, the pair has rebounded by more than 400 pips, shifting momentum toward a [...]
For the past 1 month, the UK100 saw a fantastic 600 point rally! The occasional corrections only attracted more buyers, which is healthy for the current up trend and the RSI currently exhibits elevated demand. A 130 point correction started last week on Friday, dipped below the [...]
Over the past two weeks, Japan’s leading stock index surged 2,000 points, reflecting strong bullish momentum. However, this week saw a sharp sell-off, erasing nearly all gains since mid-January. Despite this drop, the decline stalled at the 61.8% Fibonacci retracement, a key [...]
There is a clear shift in the momentum in the Oil market, with the commodity dropping with nearly 10% for the past 2 weeks. The Death Cross, a classic sell signal, is indicating that sellers are indeed in control and we are lookin now at a strong [...]
The 350 pip rally for the past 2 weeks seems like a trend reversal for EURUSD, with buyers back in control. The strong bullish momentum is also confirmed by the Golden Cross, a historic buy signal. Corrections are healthy for the trend and we currently looking at [...]
For the past 2 weeks GBPUSD went up with 400 pips and this is why we believe we might be looking at a trend reversal. The strong bullish momentum is confirmed by the Golden Cross, a classic buy signal, which supports the hypothesis that [...]
The Death Cross formation in USDJPY signals a robust downward momentum, with the USD depreciating by 300 pips over recent weeks. Further declines exceeding 300 pips are anticipated, potentially reaching the 152.00 level. Despite several corrective pullbacks, the price has been unable to surpass the [...]
Following the formation of a Double Top pattern at the 21,930 level last Friday, the NASDAQ has experienced a significant decline, plummeting by nearly 800 points. This downturn has been primarily driven by unfavorable manufacturing data emerging from China, alongside the Bank of Japan's interest rate hike on Friday. The market reaction closely resembles the [...]
GOLD's uptrend has regained strength, with several factors supporting further gains. The RSI bounced from oversold levels and now stands at 65, signaling growing demand and increasing buying volume. Additionally, the appearance of a [...]
For the past few months, USDJPY gained 2100 pips! Then, about 10 days ago the USD started dropping and so far corrected with 300 pips, dropping down to 155.00. A local Double Bottom got formed and this level also aligns with the important [...]
For the past week, the US100 has surged by over 1,000 points, signaling strong bullish momentum. The RSI stands at 69, indicating high demand and buyer dominance. A bullish Golden Cross pattern has emerged, confirming the upward trend. Despite a brief correction yesterday, with the index dipping to [...]
The Descending Triangle on the 4-hour chart, typically a bearish signal, failed to materialize this time. Instead, the Triple Bottom support at 92,000 held strong, driving significant buying volume. A Golden Cross—a classic bullish indicator—confirms strong [...]
After a 300-point correction from its December highs, the SP500 appears to be rebounding as bulls regain control. This recovery is supported by positive economic data, including strong NFP numbers, low unemployment, and CPI readings meeting expectations—all favorable for stocks. Additionally, the earnings season began yesterday with [...]
For several months, the EUR has been trending downward, losing hundreds of pips. While occasional corrections to the upside occur, bears remain in control. The strong downward momentum is highlighted by the Death Cross pattern, a classic sell signal. Yesterday, we observed another [...]
The Dollar remains strong, with buyers firmly in control since the Fed's December comments hinting at fewer 2025 rate cuts. This drove a 400-pip rally in USDCAD, now facing resistance near 1.4450 as early buyers take profit. Corrections are part of healthy trends, and the pair is testing support at [...]
