U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are grinding higher at the end of the week as they head toward major upside objectives. If reached, traders will have major decisions to make since these objectives are often viewed as profit targets. Short-sellers are likely to vigorously defend these areas in an effort to form secondary lower tops, while aggressive counter-trend buyers are going to try to drive the market through these areas.
Driving prices higher is OPEC and its ally’s quest for a balanced market. Saudi Energy Minister Khalid al-Falih said on Wednesday he hoped the oil market would be balanced by April and that there would be no gap in supplies due to the U.S. sanctions on OPEC members Iran and Venezuela.
The current price action suggests WTI and Brent may reach balance points on the charts as early as next week and this could attract new sellers.
Supply Cut Driven Rally
Crude oil is being primarily underpinned by output cuts from top producers, as well as sanctions on OPEC members Iran and Venezuela. Secondary support is being provided by the hopes of a trade deal between the United States and China, and a strong rally in the equity markets.
Additional Help from Nigeria
On Wednesday, a spokesman for President Muhammadu Bhuari said in a statement that Nigeria is willing to reduce output to help secure higher prices. Nigeria made the announcement after being called out by Saudi Arabia…