Oil has been very volatile lately. This volatility of Brent crude is mainly concentrated in the area of $61-63 per barrel. The bulls have repeatedly stormed the $63 mark but failed to get over it. As one of the market axioms says, the stronger the consolidation next to the level, the stronger the breakout. Therefore, many market participants are eager to get over this level. Now we are waiting until this intention is confirmed, and expect oil to finally move beyond this level.
The EIA weekly statistics, which is a key fundamental factor affecting the oil, showed a momentum increase from $61.60 to $ 62.45 in a short period of time. Crude oil reserves increased by 1.263M barrels instead of the expected 2.179M, and the data on gasoline and distillate inventories was also worse than the forecast.
Also this week, the WSJ announced OPEC’s possible plan to create an alliance with Russia for 3 years. The cartel wants to keep the oil price above $60 and it is quite possible that the countries will succeed in reaching an agreement in the second half of the month in Vienna. The formal creation of such a partnership could change the balance of power in the oil game, so it may cause a response of the United States.