Brent oil strengthens on increased prospects of OPEC output freeze agreement

Brent oil has added 0.5% in Asia as Asian desks respond to increased prospects of OPEC – Russia output freeze agreement.

Game changing events

Over the weekend, Russia’s Vladimir Putin extended support to OPEC’s call to producers freeze output. On Monday, the oil ministers from Saudi Arabia and Russia said that they would setup a semi-permanent working group that would monitor the oil markets and increase cooperation and mutual understanding.

This is being read by markets as a sign that major producers may indeed sign up a production freeze accord. Consequently, prices jumped to a high of $49.36 yesterday before deflating back to square one. Prices were last seen trading around $47.77/barrel.

Brent Technical Levels

The immediate resistance is seen at $47.97 (daily high, and old resistance), above which hurdle of $49.36 (5th September high) could be put to test. A break higher would expose channel resistance around $50.30. The RSI remains around the neutral 50 but is moving slightly higher on the daily charts supporting a bullish case.

On the downside, the 100-DMA at $47.65 remains the immediate support. A violation there would expose $47.46 (25 DMA), and $47 (50 DMA). We also have the rising channel support around $46 levels.