The Organisation of the Petroleum Exporting Countries (OPEC) concluded its meeting in Vienna last week by agreeing to raise output from July by about 0.6 to 0.8 million bpd, however, the real increase will be somewhat less as some countries have suffered production declines. This result set a bullish tone as the output increase was below many expectations. Crude oil prices were given another boost yesterday after the US State Department said it will require companies to cut all oil imports from Iran to zero by November. This will increase concerns about supply shortages when Venezuela’s production is already in decline. However, US shale oil supply is continuing to increase and may help to keep a lid on oil prices.
The American Petroleum Institute (API) data on Tuesday reported a major draw of 9.2 million barrels in US crude inventory for the week. Focus will now turn to inventory data reported by the Energy Information Administration (EIA) later today which is expected to show a draw of 2.4 million barrels.
US WTI Oil
In the 4-hourly timeframe WTI has recovered to trade above the August 2017 trend line and has broken out of a bull flag with a measured target of 73.00 which is near the highs of May. Upside resistance is likely at 71.70. A reversal and break below 69.20 is needed to change the outlook with support at 77.80 and 67.00.
UK Brent Oil
On the daily chart Brent found support on the February trend line and has broken out of a bull flag with a measured target of 91.00. Major resistance will be found at the May highs near 80.40 and the 61.8% retracement of the decline from the April 2014 highs at 80.50. On the flip-side, a reversal below 72.80 would change the view with downside support at 70.60.