Crude fell for a fourth consecutive week as Saudi Arabia and Russia prepared for a clash with allied crude producers over whether to raise production. West Texas Intermediate futures plummeted 3.98 percent to close at $64.322 per barrel on Friday, the greatest decline since May 25. Saudi and Russian officials in favour of reducing historic supply limits will meet resistance from Iran, Iraq and Venezuela at an OPEC-led meeting next week.
The Russians are now pushing for a bigger increase than what we expected earlier, and OPEC is divided now, said John Kilduff, a partner at Again Capital LLC. Raising production seems to be certain at OPEC’s meeting, but the question is by how much.
On a daily chart, WTI has obviously turned into a downtrend after a rally for the past two weeks, which was impeded by the 20-day moving average and then broke through the Ichimoku Cloud, an action that would trigger further losses. The current price action drops to the support level around 63.7 (61.8% retracement), which would a crossroad that makes the price either rally or keep decreasing.
If we look at the RSI (7) figure, which becomes more flat during the downside trend, there’s potential that the price will rebound in the short-term period.
Chart 1: WTICOUSD Daily
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