Crude oil may rise as members of the Organization of Petroleum Exporting Countries make record output cuts to counter the recession in major consuming countries.
Saudi Arabia, OPEC’s biggest producer, has decided to cut output by 300,000 barrels a day below its OPEC quota to prop up prices, Algerian Oil Minister Chakib Khelil said on Jan. 21, according to the state-run newspaper El Moudjahid yesterday.
Overtrend of oil is still down.
Confirmation of the direction for next week will depends if oil price goes above $50. $50 is a short term resistance level. If oil price goes above $50, it also means that there is an effective breakout of 50 days moving average.
Breakout of $50 level may signal the end of downtrend on a short term basis. Traders may want to enter a long position if there is breakout of $50 resistance level.
Alternatively if oil price retraces downwards and fall back below 50 days moving average, this might signal that downtrend resumes. In this case traders may want to enter a short position.
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