U.S. November West Texas Intermediate and international-benchmark December Brent crude oil are poised to close higher for the week. Furthermore, both futures contracts are in a position to close on the bullish side of a major technical retracement zone. This will send a signal to traders that the buying is getting stronger.
If you look at the longer-term charts, you’ll see that the battleground since May has been the retracement zones. This is because trading inside a 50% to 61.8% retracement zone typically indicates a balanced market. The rally has been supported by concerns over supply due to the looming sanctions on Iran which are expected to begin in November. The upside, however, has been limited by expectations that increased production from Saudi Arabia and its allies would take care of any supply short-falls.
However, the narrative may have changed this week when Bloomberg reported, citing unnamed Saudi sources, that the kingdom was currently comfortable with prices above $80 per barrel, at least for short-term. Bloomberg also said that while Saudi Arabia had no desire to push prices higher than $80, it may no longer be possible to avoid it.
The news raised the ire of President Trump who called on OPEC to “get prices down now!” ahead of this weekend’s meeting of major oil exporters. At this meeting in Algiers, OPEC members are unlikely to push for an agreement to raise crude output, which means the forces of supply and demand…