Oil Flirts With Resistance As US Output Falls, OPEC Looks At All Options

Talking Points:

– Crude Oil Prices Flirt With Resistance as U.S. Production Narrows, OPEC Endorses ‘All Options.’

– USD/JPY Gaps Higher Following Japan Election; Outlook Mired by 2017 Range.

DailyFX Table

USOIL

Crude remains bid as recent updates coming out of the U.S. Energy Information Administration (EIA) showed a marked decline in field outputs, while the Organization of Petroleum Exporting Countries (OPEC) and its allies keep the door open to further rebalance the energy market.

EIA

With U.S. crude field production narrowing to its lowest level since the week ending May 30,2014, the slowdown may continue to foster a bullish outlook for oil prices especially as OPEC and Non-OPEC members warn ‘all options are left open to ensure that every effort is made to rebalance the market for the benefit of all.’ In turn, broader outlook for crude remains constructive ahead of the group’s next meeting on November 30, but the rebound from the monthly-low ($49.13) appears to be losing momentum ahead of the September-high ($52.83) as the Relative Strength Index (RSI) flat lines ahead of overbought territory.

USOIL Daily Chart

USOIL Daily Chart

Longer-term outlook for USOIL remains constructive as both price and the Relative Strength Index (RSI) preserve the bullish formations from earlier this year, but another failed attempt to close above the Fibonacci overlap around $52.00 (50% expansion) to $52.10 (23.6% retracement) raises the risk for a near-term correction.

With that said, first region of interest comes in around $50.20 (38.2% retracement)followed by the overlap around $48.60 (38.2% retracement) to $49.30 (23.6% retracement), which largely coincides with the monthly-low ($49.13).

USD/JPY

USD/JPY gaps to a fresh monthly high of 114.10 following the general election in Japan, with the Yen at risk of facing further losses as Prime Minister Shinzo Abe’s coalition retains two-thirds majority in the lower house.