US crude oil is down 2% in early N.Y. trade, printing $52.84 lows, after closing Friday at $53.99. Ten straight weeks of additional U.S. oil rigs coming back on line has been a driver, with potential for U.S. production to eventually negate much of the agreed OPEC/non-OPEC output cuts. Barclays forecast that U.S. producing rigs would increase to as many as 875 by year end, from the current 529. At the same time, Iraq reportedly shipped record amounts of crude in December, while Reuters reported that Iraq’s state oil company had promised three Asian customers full February allocations.
I remain fairly positive on Oil prices following the OPEC agreement at the end of November and my post from December 5. The psychological $50.00 and $52.00 support levels have remained and following the recent peak at $55.22, also represent key Fibonacci retracement levels, (38.2 and 23.6 respectively). The 20 DMA has also provided support during the run up during December. The higher time frame weekly and monthly charts are positive with target 1 at $56.00 and target 2 $62.00.
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