12 března 2009

12/3 OPEC might cut output for the 4th time - speculation

Crude oil gained to trade around $43 over Asian session on speculation that OPEC might cut output for the fourth time. Traders purchased contracts to profit from short sales after crude dropped more than 7% yesterday as U.S. inventories showed a bigger-than-expected gain.

The OPEC meeting is this weekend in Vienna and the “oil-camp” is divided into 1) further cut reduction or 2) halt cuts and ensure a 100% compliance from the existing three previous cut’s.

As the market generally at this point have priced in a cut in production the market will be slightly bearish if no reductions will be made. As the inventories keep on rising, no signs of a economic recovery in U.S. (or rest of the world for that matter) and China declaring that their net crude-oil imports to the lowest in two years, we might see further reductions or at least a strong OPEC compliance to the existing cuts.

Support: 42.09 41.59 40.05

Resistance: 42.97 44.35 46.06

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