WTI tumbles after OPEC disappoints
Oil prices swung violently before noticeably declining during trading on Tuesday following the disappointing production freeze agreement between top oil exporters Russia and Saudi Arabia which left investors empty handed. Not only has production been frozen at January 2016 record levels, which will have a minuscule impact on the excessive oversupply, the meaningless freeze is only valid on the premise of other producers joining in. While Russia and Saudi Arabia may be commended for their ability to take advantage of the explosively volatile oil markets which have allowed expectations of production cuts to translate into speculative boosts, investors are losing faith in the ability of oil producers to cooperate and as such this should result in more selloffs.
The obstacles for the pending production freeze are noticeably overwhelming as Iran remains on a quest to reclaim lost market share, while Iraq’s production continues to soar as it incessantly pumps to generate revenue to recover from years of conflict. OPEC’s greed has played a part in this painful decline and the visible conflict of interest between OPEC and Non-OPEC members suggests that low oil prices may be the theme for an extended period. WTI Oil is heavily bearish on the daily timeframe and a solid breach below $29 may open a path to $25 and $20 respectively, a level which may leave all producers under immense pressure to move forward with a real production cut.
From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has crossed to the downside. Previous support at $30 should act as a dynamic resistance which should encourage sellers to send prices towards $25.
Full Analysis: http://fxtm.co/1Kp9SOu