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Organization of Petroleum Exporting Countries (OPEC)
Suggestions from Saudi Arabian authorities have been that the global oversupply in crude oil is now starting to abate and that supply could rebalance in line with demand, by as soon as the end of June 2018. While OPEC are currently monitoring oil production and inventories of industrialized nations, a review (with OPEC and major Non-OPEC producers) on the current output limit agreements is scheduled for the latter part of June. Current supply curbs are scheduled up until the end of December 2018, although speculation is that these production limits could be extended at the meeting. Saudi officials have already made the comments that they hope/expect to see Brent trading back at the $80/barrel to $100/barrel levels once again.
The US
In the US, recent data has suggested falling stockpiles in crude inventory held by commercial firms. It has also been reported that demand for gasoline has surged in the region ahead of the peak summertime demand/consumption part of the year. While demand is high, geopolitical tensions in the Middle East and some Donald Trump tweets of antagony towards major oil producer, Russia, have further oil price gains as of late. Furthering the supply concerns in the Middle East is the possibility of the US renewing sanctions on Iran.
Technical view
A daily chart of WTI (US) crude shows an uptrend which remains firmly intact, although in the short term, the commodity could be considered to be trading in overbought territory. While the overbought signal (in my view) is not a strong enough signal to trade against the prevailing uptrend, it may be a suggestion that those looking to join this trend might be afforded a better entry level to do so. A pullback towards $66.30/barrel might see traders considering this as the new long entry opportunity, while a pullback beyond $63/barrel might instead consider the weakening of the uptrend and be used as a stop loss level. The height of the triangle consolidation which preceded the continuing uptrend projects an upside target for US crude at $72.70/barrel.
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