On Wednesday, OPEC met and agreed to cut daily oil production by 1.2 million barrels a day, a decision that fueled a massive rally in crude oil futures. Despite the tremendous strength that traders have seen over the past few sessions, oil futures have yet to produce a confirmed breakout from the current trading range, leaving traders to ask “Could this announcement be enough to begin a new trend higher in crude prices?”
Prior to the meeting, the front-month crude oil contract was trading just north of $45 and, following the OPEC agreement, prices have rallied over $5 from these prices. Earlier in October, the oil prices produced a double top formation, highlighting the upper end of the current trading range in oil. Traders will now be targeting the 52.70 area to determine whether or not the market is going to remain in a sideways trading range, or if this could be the event that causes the crude oil prices to breakout to the upside and potentially begin a new trend higher. For more on specific strategies to implement in the crude oil market, please contact me at 312.373.5096.
Series 3 Licensed
Senior Market Strategist
Follow Bob on Twitter @Bob_Haberkorn.
Bob started his career in 2005 as a broker with Lind-Waldock. He is often quoted in industry sources, such as the Wall Street Journal in regards to precious metals and the copper market.