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Despite an effort by leading oil consumers to cool the market, oil prices rose to a one-week high on Tuesday.
To cool prices after OPEC+ producers repeatedly ignored calls for more crude oil, the United States said on Tuesday that it would release millions of barrels of oil from strategic reserves in collaboration with China, India, South Korea, Japan, and Britain.
After years of falling investment and a global recovery from the COVID-19 pandemic, analysts believe the effect on prices will be short-lived.
WTI crude oil rose 2.3%, to breach $76.4 level and retest previously broken neckline at $78.95, ending the gains at this level, maintaining the negative effect of this pattern.
Similarly, the stochastic shows clear negative signals, which support the likelihood of bouncing bearishly to resume the correctional bearish trend.
It is therefore forecast that negative trades will be observed in the upcoming sessions, starting with testing the $76.4 level again, while breaching the $78.95 and $79.85 levels will stop the correctional bearish scenario and lead the market to regain its main bullish trend.
For Brent, it was its best close since November 16 and the largest percentage gain since August. Brent also went to its highest premium over WTI since mid-October.
Since hitting a three-year high of $86.7 on Oct. 25, Brent prices have fallen over 10% as a result of discussions of a coordinated release of reserves, a strong dollar, and the potential impact of the fourth wave of COVID-19 cases in Europe.
In mid-to-late December, the Biden administration announced it would release 50 million barrels from the U.S. Strategic Petroleum Reserve (SPR).
No one would be surprised if (OPEC+) scaled back their production plans, OPEC noted in a coordinated SPR release that was less than expected.
Russia has so far rebuffed repeated requests from Washington to boost oil production by the OPEC+ alliance, which includes allies such as the Organization of the Petroleum Exporting Countries.
Energy Minister Suhail Al-Mazrouei says UAE has no reason to increase contributions to global markets any time soon. He says the UAE’s technical data gathered ahead of an upcoming OPEC+ meeting in December indicates an oil surplus in the first quarter of 2022
This article was originally posted on FX Empire