March West Texas Intermediate crude oil ended January with a whimper, but showed promise early February with a spike to the upside, but this attempted breakout fizzled before it could gain traction. Once again buyers were thwarted by one of the key factors controlling the price action – too much U.S. supply.
To recap last month’s trading activity, two themes controlled the price action – compliance with the OPEC/Non-OPEC plan to cut output and increasing U.S. production. Based on the lower monthly close, it looks as if increasing U.S. production was the main concern. Based on the early price action in February, this theme seems to have been carried over into the next month.
In January, U.S. March West Texas Intermediate Crude Oil closed at $52.81, down $1.85 or -3.38%. International April Brent Crude Oil finished at $55.58, down $1.91 or -3.32%.
The March contract rallied to a multi-month high the first day of the month in anticipation of the OPEC production cuts, but that was it for the move. The rest of the month prices moved sideways to lower. In fact it took only six days to establish the market’s range for the month. After that, the market traded inside the range, swinging in both directions periodically. This type of price action typically indicates investor indecision and impending volatility.
On the bullish side, the month ended with Reuters reporting that crude oil supply from the 11 OPEC members with production targets…