The oil market is already playing for the OPEC summit

Petroleum more expensive despite the increase in its inventories in the US, and prices are highest since the end of January and by 11 percent. higher than at the beginning of the month. Investors are already playing at the OPEC meeting in March.

Check it out: Brokers offering oil trading [List]

Inventory data

Last week, US oil inventories increased by almost 4,2 million barrels, exceeding market forecasts at 3,5 million, according to data released on Wednesday by API. A similar increase can be expected from the weekly data published by the US Department of Energy. These will see the light of day on Thursday at 17:00. The market estimates that oil reserves will increase by 3,8 million barrels against 7,46 million a week earlier.

The increase in inventories signaled by the API and their likely increase in official data does not prevent oil prices from rising further. On Thursday, a barrel of WTI had to pay USD 53,92 against USD 53,45 the day before.

Crude oil chart WTI, interval D1. Source: MT4 Tickmill.

The OPEC Summit is in the spotlight

Recent increases in oil prices have fueled the calming of concerns about the coronavirus epidemic, but this upward move even more strongly supports expectations for the forthcoming OPEC summit. The cartel countries and other oil producers will meet on March 5-6 this year. It is realistic that their response to the drop in demand for oil will be to reduce its production. And this event is currently playing the market, while obviously correcting previous strong declines.

Crude oil chart WTI, interval H4. Source: MT4 Tickmill.

The observed increases in WTI oil prices are fully justified by the technical analysis side. This is perfectly seen in the H4 compression chart, where the demand formation of the double bottom has been created. Full implementation of this formation means an increase in the WTI oil exchange rate to USD 55,05. It will not be easy, because on the way the demand side still has to overcome the resistance at 54,31 USD. However, if it succeeds, it will be possible not only to test USD 55,05, i.e. the minimum range of the increase resulting from the mentioned formation, but maybe even a move around USD 55,50, i.e. up to 38,2% abolition of earlier declines. And only there one should expect an end to this upward rebound.