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Crude oil prices have stabilized following their drop to 17-year lows earlier this month.
However, both the short-term and medium-term trends remain downwards for now. In the background, OPEC is in conversation with a Texas state energy regulator and US shale producers to coordinate oil production cuts. President Trump supports the move as the low crude oil price is threatening the US energy sector.
Ryan Sitton, from one of the regulators, said to the FT that Texas could reduce supply as “a bargaining chip we can bring to the table” in talks with the US, Saudi Arabia. However, not all in the US agree on the idea of working together to support prices as they think it will penalize efficient production. More is needed for all parties to agree, and until that happens, several US shale producers are at risk of going out of business.
From a technical perspective, the price is trapped between the March 25 low of 22.89, and the March 24 high at 25.16. On a break to the upper limit, the price might trade close to the next high, the March 20 high at 28.60. On a break to the 28.60 high, the longer-term trend could turn positive.
While a break to the lower support level at 22.89, the price might be able to reach the March 23 low at 21.74, followed by the March 22 low at 20.74.
WTI Crude Oil Chart
By Alejandro Zambrano, Chief Market Strategist at ATFX.
