Will start adding longs at 41 with a SL at 39
Reuters quote Iran´s Minister Bijan Zangeneh who is obviously an incredibly reliable source =) Mr. Zangeneh says that the cartel agreed to cut the production from 33.24 mln barrels a day to 32.5-33 mln barrels.
But still few questions left. First of all, the decision is not immediate, means, OPEC countries do not stop pumping on record levels at least until November. On next formal OPEC meeting in November they will decide on who will cut and for how much. Reports quoted that Iran agreed to join the deal if they will not be oblidged to cut. And the question is: where is the deal then?
Second: Non-OPEC countries are not part of the deal. OPEC will invite these countries to join in case the agreement is formally reached in November. And there we have Russia who has been pumping all-time record 10.5 mln barrels a day. Today´s outcome means Russia can easily pump the record amount of oil from here to summer 2017 as, due to the technical restrictions, Russia will not be able to stop production in winter period without destroying the wells. On another side, Saudi Arabia and Russia are fighting for the asian market while China is becoming the biggest oil importer in the world. Having serious problems with the budget deficit, I don´t think Russia joins any kind of cut deals, specially, if OPEC will respect it.
And last but not least: to be honest, OPEC countries haven´t agreed any different story today. OPEC has production quotas for each country established dozens of years ago. Today´s oversupply situation is partially a result of not respecting the quotas. So, basically, what OPEC pre-agreed today is to review the quotas which nobody respected anyway and adjust them to the all-time record production levels.
This is the fundamental part.
From chart point of view, not many things changed: below, I enclose a chart showing a Gartley pattern which is still valid. They have to close the day candle above 47.72 to invalidate the pattern. Otherwise, target will be 41.30 to complete the Wave E of a triangle.
I also publish a possible bullish forecast in case we have a good daily closing by tomorrow and today´s pop really means a beginning of a bullish rally which should end near 60 Dollars per barrel.
I will post a new chart with the Butterfly pattern and will update this in case we break to the lows again
1: We break and close 49 by Monday-Tuesday. Then, obviously, I will have to find another scenarios for trading as I don´t have in mind any bullush breakout before, at least, a small retrace.
2. Market goes down next week and validates previously published scenarios. Having them in mind we will try to anticipate next moves.
Even if it falls, I doubt Oil will bring in a massive bullish run to 65-70. And even if it does, you obviously know where the top is.
Oil at 54-55 is also good short searching for a retrace to 50.