It seems that the Oil investors are seeing the light out of the tunnel: the $40bbl barrier has been broken by both WTI and Brend, which are trading at the moment respectively at $40,26bbl (+0,15%) and $41,61bbl (+0,17%).
The last time was in December and from that moment it has seemed that the oil was going down and down, with american rigs constantly closing down and the investors submitted to a catastrophic downside price action.
From the 13 years low ($26,21bbl) touched by the WTI in early February, it has gained more than 50%, helped by the Fed decision not to change the interest rate and by the previsions of a more gradual rise in the next months.
This is generally good for the markets: lower interest rates means a weaker Dollar and, considering that the Oil is traded in USD, this pushes producers like Saudi Arabia to increase the price, in order to maintain their revenues.
American rigs in the meantime went down to 1,125 from 480 (the lower level since 1940), which has pushed the prices even higher.
Despite those factors, yesterdays rally has seemed powered by a possible OPEC-NON OPEC meeting in the mid-april in Doha and for which the oil Quatar Minister Mohammed Bin Saleh Al-Sada express his willingness to find an agreement on the production freeze, despite Iran’s participation.
In order to have a nice Oil price action we’ve to wait until the next statements about american rigs, but both benchmarks are seen to the upside in the short-midium term.
Meanwhile the Canadian Dollar, highly correlated to the Oil price, is moving sideways at 1,3000 after having gained more than 200pips in the last few days.
Today we’ve in the book the canadian retail sales and the Consumer Price Index which could bring the USD/CAD to differ from the oil price, if something wrong were to happen.
The flat move of the USD/CAD makes difficult to say something about the possible price action but a move from the current level to the up could bring the cross to 1,3055 after which the second resistance should be 1,3088.
On the opposite side, if the cross will move down, the first relevant support should be at 1,2866.