Oil prices rallied more than 25.5% in April, yet According to Organization of Petroleum Exporting Countries (OPEC), the decline in oil prices over the past year has been intensified by speculation that played an important role in the 60% drop in oil price seen last year. On Monday the OPEC released its monthly bulletin showing that the rise in supply from outside the Organization of Petroleum Exporting Countries at a time when demand for oil was weak was the main reason for the drop in oil.
The OPEC had left its production target unchanged at a November meeting. The next meeting is scheduled on June 5 in Vienna to discuss the market and output targets. Prices have recovered somewhat over recent weeks on the back of a decline in US rig counts and geopolitical tensions in the Middle East, which have taken supply out of the market.
In the meantime, markets remain cautious on the EIA’s report on crude inventories due today, following last week’s number of 1.91 million barrels. Today we have the release of U.S. Energy Information Administration (EIA) latest survey. The report is expected to show a drop in crude oil stocks with estimates at 1.20 million barrels.
On yesterday session, crude oil rose breaking above previous inside day high and closed near the high of the day. The commodity continues in a recovery phase and is pushing upward after a two day consolidation. The stochastic is showing an overbought market but even with the commodity well into overbought territory, we should not fight the strong upward correction yet.
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