Should You Be Watching Oil?

January 23, 2017 6:45AM CST

WTI Crude Oil prices fell early on Monday, as signs of a strong recovery in US drilling overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals set at the last major OPEC meeting in December. Some of the ministers from members of OPEC and non-OPEC countries said at a meeting in Vienna on Sunday, that of the almost 1.8 million barrels per day that they had agreed to have taken out of the market, 1.5 million bpd had already been cut.

The US drillers increased to the most active rigs in nearly four years, extending an 8-month drilling recovery. The US oil production has risen more than 6 percent since mid-2016, though it remains 7 percent below the 2015 peak.

I don’t think the US numbers are going to have as strong as an effect on the market for at least another 8 months.  The market showed us excellent support the other week followed by strength to the upside coming into this week.  Today’s price action is small compared to what we will see over the next few weeks.

Looking at the number of oil bbl. consumed per day in the US and China alone makes it hard to believe oil is going to head too much lower.  The US alone consumes over 19 million bbl. per day followed by China which is consuming over 12 million bbl. per day.

Traders need to take advantage of these prices by grabbing some longer-term contracts mixed with some shorter-term trades to catch these cheap prices before it is too late.

Crude Light Daily

Weekly Crude Oil Chart - TradingView


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