OPEC doing more than we thought possible

Since the start of the year, oil has been slowly and steadily heading higher. OPEC+ has been doing a large amount of production cuts and a subsequent rally has persisted in the market. Even when Crude Oil inventories rise in the US, this has little effect on the price of oil. But more often we see a fall inventories and price rises in reaction to this.

Our view of the current oil market is balanced. Price is currently overheated, but this has never stopped commodity prices from rising further. In fact, the more short traders get trapped, the higher price goes as they stop out of their positions. Data is mixed, but technicals are positively bullish. The surprise buildup of inventories barely affected the price.

If market sentiment is to turn south, due to negative news from trade negotiations, oil prices could decline along with equity markets. Oil is sensitive to sentiment and seems to be ready for a correction.

If you are bullish oil, the target would be the strong fibo level of 61.8% located at $64.00. More likely we will witness a correction which will take oil prices down to $60 before the rally continues.