Oil prices were volatile ahead of the OPEC meeting. Saudi Arabia Oil Min al-Falih stated OPEC’s strategy is succeeding as prices are on their way up. He noted everyone is satisfied with the market and that he sees supply and demand coming into balance. The key comments that drove the initial slide came from the Iran representative. Iran Oil Minister Zanganeh said an output ceiling is meaningless without individual quotas. He also wants a 14.5% of OPEC's output quota for Iran.
As expected, OPEC did not reached a new oil supply agreement. The OPEC statement highlighted no change in its oil output policy and that supply and demand are converging.
Price action on the US oil daily chart shows that the bearish butterfly pattern that formed last week has yet to trigger a key reversal. Price has maintained a stubborn $47.40 to $50.21 trading range. With the OPEC meeting behind us, key resistance remains the $51.00 handle. If we see bullish momentum resume, further resistance may target the $56.50 level.
If the recent rally stalls, key support will come from the 50-day SMA, which currently trades around the $43.72 level. Major resistance remains the psychological $40.00 handle.
The trade: Sell US oil at $50.75, with a stop loss at $51.75 and take profit at $47.75. The risk/reward ratio is 1:3