Is it time to play it safe? The Saudi oil minister Khalid Al-Falih said the safe bet coming out of the OPEC meeting today is a nine-month extension of the current 1.8 million barrels a day of Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC production cuts, yet the safe bet might not wow oil traders.
Brent’s ability to reclaim the broken $49.90 per barrel support level two weeks ago was the first and key bullish trigger, which has since led to further technical follow-up buying. As a result, the London-based oil contract has risen above both its 50- and 200-day moving averages at $52.40 and $52.00 respectively, as well as prior resistance at $52.70. Thus, the old resistance area between $52.00 and $52.70 is the key support zone to watch heading into and in the immediate aftermath of the OPEC meeting.
The Organization of the Petroleum Exporting Countries is getting ready to have a big party in Vienna as they hammer out an extension of the current OPEC agreement. While there has been some last minute negotiating by some players like Iraq, it is likely the deal will be extended by nine months.