January West Texas Intermediate crude oil futures are showing a muted response to the news that the OPEC-led group agreed to extend their production cuts in a widely expected move designed to trim the supply glut and stabilize prices.
OPEC and non-OPEC producers led by Russia on Thursday agreed to continue the production cuts until the end of 2018, while also signaling a possible early exit from the deal if the market overheats.
WTI crude oil traders reacted as if the OPEC news had been fully-priced into the market. The WTI futures contract is holding above a key area on the daily chart at $57.03 to $56.55, indicating the presence of buyers. A sustained move $57.03 will be bullish, a sustained move under $56.55 will be bearish over the near-term.
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The daily swing chart indicates there is plenty of room to the upside if $59.05 is taken out with conviction. If this attracts increasing volume then we could see an eventual move into the July 14, 2015 main top at $61.88.
On the downside, the main trend will change to down on a trade through $56.75. After clearing this price and the short-term Fibonacci level at $56.55 when we could see the start of a steep break with the first target a support cluster at $55.07 to $55.00.
According to Kiyoshi Homma, a director at Japanese refiner Idemitsu Kosan, “Oil prices are likely to hover around current levels till next June, when stockpiles would be optimized through continued…