WTI - Probable correction, Russia and S. Arabia increase yield

Russia and Saudi Arabia pumped an extra 1 million barrels per day of oil and could increase even more to slow down the strong growth of black gold. However, the market does not seem to care.

After meeting in Algeria in September, prices in four years, the two largest oil exporters in the world tried to send a clearer signal to alleviate concerns about consumer prices and the US president.

"The current oil price is largely a result of the current administration of the state administration - sanctions against Iran and political problems in Venezuela," Russian President Vladimir Putin said earlier today. "Donald, if you want to find the culprit to raise prices, you have to look into the mirror." he added.

As has already become clear, Russia can raise production by 200 to 300,000 barrels a day, while Saudi Arabia can fully cover sanctions against Iran.

What is the price and is it right to trade right now?

In view of rising global demand, we will likely see a short-term price correction and, at best, a price hold in the area between $70 and $75 a barrel.

Technical Look - Weekly

The price is in a strong upward trend and today marks a new peak reaching last in 2014. Since the week is not over, we can not commit to whether the price will stay above the previous peak and will confirm the upward movement and acceleration of the trend. Despite the strong upward momentum, there are several signs that indicate a weakening of the main move. What signals a trend weakness is the combination of CCI14 and 50 indicators developed specifically to track and analyze the movement of raw materials. The long-term CCI-50 forms a backward divergence with the price that marks growth as the indicator decreases. The short-term CCI-14 is entering an oversupply area of ​​more than 200. Lastly, we observed similar values ​​in 2013 when the price of oil was near the highest - Ever!

Given the motivation of OPEC+ to increase yield and rising shale production in the US, I expect the price to stay at current levels or lower. Transactions from current levels remain too risky given the long-term trend.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

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