Commodity Blog

Commodity news, technical and fundamental analysis, market data on precious metals, energies, industrial metals, and soft commodities


Couple of Factors Should Determine Performance of Crude in Short and Long Term

November 27, 2017 at 4:48 by Vladimir Vyun

Crude oil was on a tear lately, rising for three months in a row. It begs the question: will the rally continue and what factors may stop it? While it is hard to say if the rally halts in the near future, there are two important factors that traders should consider this week.

The recent rally of prices for crude was a result of the oil leak in the Keystone Pipeline. The pipeline is very important as it transfers oil from Canadian oilfields to refineries in the United States. Without it, North American supply of crude takes a serious hit. And while the pipeline’s operator TransCanada tries to fix the leak, according to rumors, repair can take about a couple more weeks. That factor is bullish for crude in the short-term, at least until new reports about the situation come out.

Over the longer-term, the key factor should be this week’s meeting of the Organization of Petroleum Exporting Countries and some non-OPEC producers in Vienna. Last year, the OPEC managed to convince its members and some oil-producing countries to cut output as a measure to support oil prices. Initially, markets were very skeptical that the arrangement will have any significant impact on prices. Yet gradually, the deal managed to push prices higher. The OPEC has already extended the cuts once, pushing the end date to March 2018. Now, the participants of the agreement will negotiate on November 30 if the deal should be extended for longer. Initially, hopes for the extension were high. But recently, rumors started to spread that Russia, the major non-OPEC producer participating in the deal and big supporter of the cuts, is no longer willing to take part in the agreement. But things have changed yet again as Bloomberg reported that the OPEC and Russia made the outline for the deal and just need to hammer out details. Whatever the case, the meeting on Thursday should determine the trend for oil for a long term.

If you have any questions and comments on crude oil today, use the form below to reply.

Leave a Reply