Crude Oil Forecast March 6, 2017
U.S. West Texas Intermediate crude oil and international crude oil futures surged on Friday in response to a weaker U.S. Dollar. Concerns over Russian production figures, which showed weak compliance with OPEC’s plan to curtail production, however, kept a lid on prices.
April WTI crude oil closed at $53.33, up $0.72 or +1.37% and May Brent crude oil finished the session at $55.90, up $0.82 or +1.49%.
Traders weren’t surprised by the price action because they’ve become accustomed to buying breaks. Earlier in the week, the market sold-off for several days due to concerns over increasing U.S. production.
According to Baker Hughes, U.S. drillers added rigs for the seventh straight week. The rig count rose by seven rigs, bringing the total to 609, the most since October 2015.
In other news, world top exporter Saudi Arabia cut the price for its April crude deliveries to Asia.
Traders should also watch Russia. Last week it was revealed that Russia’s February oil output was unchanged from January at 11.11 million barrels per day (bpd), energy ministry data showed, with cuts from October 2016 levels remaining at 100,000 bpd, or a third of what Moscow pledged in its agreement with OPEC.
Prices may be underpinned on Monday by news of increasing supply disruptions in the Middle East. According to reports, there are new doubts that Libya will be able to revive its oil production after an armed faction entered two major oil ports on Friday. The aggressive action overtook forces that captured and reopened the terminals in September.
Watch the U.S. Dollar and Russia this week. These two factors should exert the most influence on the direction of oil markets all week.
WTI Crude Oil Technical Forecast
The WTI Crude Oil market rallied slightly during the day on Friday, as the $52.50 level offered support yet again, as it has been a minor supportive level previously. I believe that a break above the top of the candle more than likely will send this market looking for the $54.50 level above. However, this is also a market that is choppy to say the least so looking for short-term trades will be about as good as this gets. Keep in mind that we are currently trying to decide whether the oversupply or the OPEC led production cuts will drive this market forward, so expect a lot of choppiness and volatility. Currently, most trades will be of the short-term variety at best, so it’s not until we break out of the blue box that I see place in a trade for any real length of time.