Crude oil has posted gains on Monday. In the North American session, West Texas Intermediate crude oil futures are trading at $56.30, up $0.22 or 1.67%. Brent crude oil futures are trading at $63.80, down $0.37 or 0.61%.
Crude Slides on OPEC
Last week ended quietly for the major currencies and precious metals, as there were no U.S. events and Friday, and the markets closed early. However, crude oil caught the market off guard, as WTI crude fell by 4.2% on Friday. This marked its sharpest drop since mid-September, following the missile attacks on a Saudi oilfield. The catalyst for this most recent plunge was speculation that OPEC members would not agree to deeper cuts in production. Saudi Arabia, the largest producer in OPEC, wants larger cuts in order to keep oil prices around the $60 level. However, Russia and other oil producers have shown less willingness to cut into their oil revenue by trimming output. Investors didn’t waste any time responding to this latest rumor, as concerns about an oversupply of crude sent oil prices sharply lower on Friday.
U.S. Manufacturing PMI Dips
Oil prices received also received a boost from as a key manufacturing report disappointed. The ISM Manufacturing PMI. The index dipped to 48.1, down from 48.3 pts. Analysts had expected the index to improve to 49.2. This marked the fourth straight release below the 50-level, pointing to ongoing contraction in the manufacturing sector.
Crude was in a consolidation pattern throughout last week, but showed a strong downward breakout on Friday. On the downside, we find support at 55.00, followed by support at 54.50. On the upside, the 200-EMA and 50-EMA lines remain relevant and are additional barriers against upward movement. The 50-EMA is currently at 56.29 and is closely followed by a resistance line at 56.50. Next is resistance from the 200-EMA at 57.78.
This article was originally posted on FX Empire
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