The price of oil is rising this week due to rising optimism about trade talks between the United States and China. Hence, there is a chance that crude oil may gain this week, which would mean the first increase in three weeks.
On Thursday, October 10, oil prices increased by almost 2 percent, which is the largest one-day price increase for over three weeks, when we saw a surge in the oil market after attacks on Aramco refineries in Saudi Arabia. In the oil market, therefore, cards are again dealt under the dictation of the ongoing trade war and its impact on the slowdown in the global economy. In turn, the greater the slowdown, the lower the demand for oil and probably its lower price, and vice versa. The recovery in the economy could be conducive to an increase in demand for oil and thus seems to be raising prices.
President Donald Trump said that talks with Chinese partners this week are going very well and that they will continue on Friday. In turn, the Secretary General of OPEC Mohammad Barkindo said in London that OPEC and its allies will do everything to prevent another fall in oil prices.
In his statement, Barkindo, quoted by Bloomberg, added that oil has lost about 19 percent since the April peak, because the protracted dispute between Beijing and Washington is worsening economic prospects. Barkindo said that trade has cast a shadow over oil demand and a failure to reach a deal would be catastrophic for the market.
OPEC countries will meet with their allies, including Russia, in December to discuss further production policy. It may still be too early to talk about the outcome of this meeting, but there are indications that the surplus oil will not return to the market soon.
Oil, H4 chart. Conotoxia trading platform.
Looking at the chart, the price of oil for the third time defended support at the level of 51 USD per barrel. If this level is still maintained by oil buyers, then theoretically the space for a rise is quite large here, because resistance can be determined by previous peaks and the line drawn on their basis.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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