Oil prices continue weakening but the rates are still in the frames of the upward trend which began over a year ago. However, the trend is near its completion and now on the daily chart you can see signs of a flat trend formation (like the prices from November 2016) that remains in the range of $47-$54 per barrel.
Support and resistance lines haven't been broken yet. The increase of the drilling rigs in the United States for the 15th consecutive week continues to adversely affect the price of oil. It reached a minimum level, which only happened twice in six months.
On the market we can see an uncertain situation: on the one hand, OPEC countries are going to continue their agreement to reduce oil production and investors believe that it will be done at the next meeting pn May 25. On the other hand, the USA cancels all these efforts with their growing oil production. An increase in oil demand is unlikely to resolve the issue with the overabundance of oil on the market.
Amid all of this, the long-term forecasts of some analysts, in particular experts from Citigroup (NYCE:C), about a further increase in the price of oil to $65 in the second half of the year do not seem probable because oil prices are constantly under the pressure of a number of factors. This week it was the restart of oil production in Libya, the recession of business activity in China and, as mentioned above, the constant increasing in drilling rigs in the United States. Factors that could unambiguously support the price of oil are not enough, but the situation may change at the end of the month based on the results from the OPEC meeting.
At this moment the entry point to the market can be the levels of 47.4 and 48.2. The most optimal right now are the deals to BUY which can be effective to get the profit on the price correction. The MACD and RSI oscillators partially confirm this. It is most likely that after reaching a new minimum level the price will move up. Soon investors will focus on the next OPEC meeting, and news from countries-participants of the agreement to limit oil production. This can slightly enhance the price of the black gold in the short term.
