Oil Plunges after Doha Summit Failure to Freeze Supply

Oil Plunges after Doha Summit Failure to Freeze Supply

The price of crude oil fell broadly during the Asian session on Monday to less than 39.50 following the Doha summit. The technical bias however remains bullish in short term as far as the 36.00 support area is intact.

Technical Analysis

As of this writing, the price of oil is being traded near 39.57. A support may be noted near 36.06, the swing low of the last major downside move as well as a strong horizontal support as demonstrated in the following daily chart. A break and daily closing below the 36.06 will push the oil price in negative territory, opening doors for a move below the 30.00 support area.

On the upside, the price is likely to face a hurdle near 42.86, the intraday high of Friday ahead of 43.54, the swing high of the last major upside rally. The technical bias will remain bullish as long as the 36.00 support is intact.

Doha Summit

A summit in Doha between the world’s largest oil producing countries ended without an agreement on Sunday, as country leaders failed to strike a deal to freeze output and boost sagging crude prices. Initially, the meeting’s outcome was thrown into doubt after Iran made a last minute decision not to attend and Saudi Arabia vowed not to halt or freeze production unless other major producers did the same. Amid strains between the regional rivals, nearly 20 of the world’s largest oil exporters could not find enough common ground to hold the line on output after marathon talks.

Trade Idea

Considering the overall technical and fundamental outlook, buying oil near the above mentioned support zones could be a good strategy if we get a valid bullish reversal candles.

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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