Brent Crude Oil Plunged 7% After OPEC's Decision & Remains Bearish

Both WTI and Brent Crude Oil plunged on Thursday on disappointment in OPEC’s production policy. OPEC and other major producers’ countries, including Russia, agreed to extend their six-month deal to decrease output by 1.8 million barrels a day until March 2018, nine months later than the initial agreement. Brent crude oil futures plunged more than $3 a barrel since yesterday, as investors were anticipating deeper cuts. Saudi Oil Minister Khalid Al-Falih said at the beginning of the group’s meeting in Vienna that this decision is “very safe and almost certain option to do the trick”. He also added that the glut will be “balanced earlier than later”. Nigerian Oil Minister Emmanuel Kachikwu stated that the decision taken would bring price stability and suggests a “USD 50 floor” for oil.

Brent Crude Oil Plummeted Aggressively After Bullish Run
The Brent crude oil had an aggressive sell-off during yesterday’s trading session as it plunged more than 7%. Also, the oil recorded a nine-day low at $51.18 early this morning while now is moving slightly higher. The bullish run for the price paused and now we are waiting for a bearish movement until the medium-term rising trend line which is standing for more than a year. So, the Brent we are expecting to hit the $49.50 price level or moreover, the $46.70 support barrier.

The technical indicators, on the daily chart, lost their strong upward momentum and are following the neutral – negative zone. The Relative Strength Index (RSI) plunged below the 50 level but now is pointing to the upside. Furthermore, the MACD oscillator is falling in the positive path. It is worth mentioning that in the weekly basis, the price met the 50-SMA and this may be a strong obstacle for the oil to fall lower.



Analysis by JFD Research