Brent oil recovers from 1-1/2 week low ahead of OPEC decision

Brent oil recovered from 1-1/2 week low of $45.91 to $47.50 as investors brace up for the possible OPEC output cut deal.

OPEC’s credibility is at stake

Oil prices fell sharply on Tuesday after OPEC failed to reach a consensus on the output cut deal that is to be presented at today’s ministerial meeting.

The stakes are high, especially because the Cartel’s credibility is at risk. Over the last eleven months, the OPEC repeatedly overpromised to under deliver. Markets have reached the breaking point and are unlikely to accept anything less than an output cut deal.

Brent Technical Levels

A break above confluence of 10-DMA and 100-DMA around 47.84 would open doors for a rally to 50-MA level of 48.92. A violation there could yield a re-test of 49.93 (Nov 22 high).

On the other hand, a breakdown of support at 47.20 (session low) would shift risk in favor of a drop to 46.31 (Monday’s low) and 45.91 (previous day’s low).