Crude Oil Prices Break Out Despite Rising Rig Count

Crude oil prices moved to a 3-year high breaking out above resistance which is now support and poised to continue to climb.  OPEC believes demand will remain robust, and Saudi Arabia plans to continue to reduce exports to the United States. Oil rig counts showed an increase of 7-rigs, which coincides with the increases in U.S. domestic production. With a conflict with Syria on the horizon, crude prices are likely to remain buoyed.

Technicals

Crude oil prices moved higher breaking out this week, and climbing above $67 per barrel for the first time in 3-years. Support is seen near former resistance near 66.66. Additional support is seen near the 10-day moving average at 64.58. Target resistance is seen near the 50% Fibonacci retracement level at 69 per barrel. Momentum is positive as the MACD (moving average convergence divergence) index recently generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).

OPEC collective output fell

OPEC collective output fell by a whopping 201,400 barrels per day in March, compared to a month earlier. It was the largest single-month decline since November and it took OPEC’s combined production down to 31.958 million barrels per day which is the lowest level in a year.

Venezuela lost a significant chunk of output, falling by 55,300 barrels per day, taking production down to 1.488 million barrels per day, according to OPEC’s latest Oil Market Report. But the ongoing production losses in Venezuela are not really surprising.

Some of those countries have seen production fluctuate, perhaps due to maintenance, and it isn’t obvious that the losses are set to stick around for a while. But Venezuela is producing almost 500,000 bpd below its target as part of the OPEC agreement, which means the combined OPEC compliance rate is way above 100 percent.

TPP deal could be renegotiated

That’s the implication coming out of today’s meeting of ag states. Senator Sasse reported President Trump has deputized his economic advisor Kudlow and Trade Rep Lighthizer to lead a review of TPP. The president has indicated he’d “have the back of ag states” were tariffs to hurt the agricultural industry.

NAFTA trade deal is a long way off

NAFTA trade deal is a long way off, despite the U.S. compromise on auto content demand. The globeandmail reports that the three nations are still far from reaching a deal to renew the trade agreement. Hopes for a broad agreement in the near term were dashed yesterday following news that U.S. trade Representative Lighthizer will not attend the Summit of the Americans in Peru, with the Deputy U.S. Trade Rep Mahoney attending instead. Lighthizer had planned to meet with Canada’s Foreign Minister Freeland and Mexico’s Economy Minister Guajardo on the sidelines of the summit to discuss the latest on NAFTA