Oil Rally Above $46 as Supply Glut Eases â€“ 13 June, ACY Team

ACY Australia

West Texas Intermediate had a second straight day with a climb of 0.56 percent to settle at $45.894 a barrel on the New York Mercantile Exchange, paring gains from as high as $46.595 during the session yesterday on June 12.
Recent rebound occurred after Saudi Energy Minister Khalid Al-Falih said inventories are declining and reductions will accelerate in the next three to four months. The soaring U.S. stockpiles may be a major reason that gains in these two days did not erase the 3.8 percent loss last week.
Crude keeps trading below $50 a barrel amid investorâ€™s concern over increased U.S. crude supplies will limit its further price rise, which is an action to counter production curbs by the Organization of Petroleum Exporting Countries and allies including Russia. American explorers added oil rigs for the 21st straight week to the record high since April 2015, a statistic from Baker Hughes Inc. Output at major U.S. shale plays will reach a record 5.48 million barrels a day in July, according to the Energy Information Administration.
After OPECâ€™s deal to limit output in attempt to push prices failed to impress investors as it didnâ€™t include deeper cuts, some alternative or exit plans, all focus turned to whatâ€™s happening in the U.S. market. Thereâ€™s still a bearish outlook for crude oil in the long term before a potential agreement could be reached between OPEC and U.S. or some further effective plans could be put forward by OPEC.
Technically oil prices has some rebound rather than breaking the descending price channel against the U.S. dollar, hinting that a bottom may be in place near the lower channel line and prices likely continue to trade in this channel.
Near-term outlook for crude turns to constructive as price & the Relative Strength Index (RSI) run the bullish trends carried over from early May. In the event that the oil rebounds further, traders should first watch for a resistance found at 60-day moving average. Alternatively if prices fail to rally and reverse lower to break the lower channel, a support could be found at November 29â€™s low of 44.407.
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Chart 1: WTICOUSD Daily

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