The agreement by OPEC members in June to increase oil production by up to as much as one million barrels a day – depending on which energy minister you speak to – was seen as a precursor to falling prices.
US President Donald Trump, no doubt mindful of the US summer “driving season” and the forthcoming mid-term elections, also sought more supply from ally Saudi Arabia via his Twitter feed.
In the short-term it worked. The price of WTI Crude fell from early-July highs of $74.5 per barrel down to beneath $68.5 in last week’s trading. However, the charts point to more bullish territory.
According to Bank of America-Merrill Lynch's Paul Ciana, who was speaking to CNBC on Monday morning, technical analysis says that prices will continue to firm in the next six to 12 months.
Pointing to a head-and-shoulders pattern, he suggests that a breakout was looming. “This is the exact technical point where market participants should be shorting bonds and going long commodities, especially if this relationship is going to hold up and remain true which, of course, I think so,” he said.
Another chart illustrated the strength of WTI. In the last six weeks, the price has rallied more than seven percent – even accounting for last week’s dip.
This is of course good news for Middle East countries who have been building positive balance sheets in the last 18 months on the back of climbing oil prices. According to Bloomberg in April, Saudi Arabia had been targeting a price of around $80.For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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