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  • The FOMC minutes had little impact on the price of oil.
  • On a spot basis, the price is failing to convince on upside attempts.
  • It is increasingly likely that deeper and longer (OPEC) cuts will be required to reach a balanced market.

West Texas Intermediate crude has shown little reaction to the Federal Open Market Committee’s Minutes on Wednesday, with sights on US Consumer Price Index tomorrow and more of a focus on the fundamental supply vs demand backdrop.

On a spot basis, the price is failing to convince on upside attempts, albeit up some 0.40% on the day so far having climbed from a low of $52.28 only to be rejected at the $53.73 highs and painting a bearish pin bar on the daily charts again.  

FOMC Meeting’s Minutes less dovish than expected

The FOMC minutes had little impact on the price of oil and markets in general which essentially  reiterated  Fed governor Powell’s recent bullish comments with respect to the US economic outlook. The greenback can likely  take solace from  the paragraph which stated  that “several policymakers favoured keeping  rates  steady, saying baseline economic projection had changed very little and that uncertainties would not derail the expansion.”

As for futures prices, for November delivery, WTI traded on the New York Mercantile Exchange climbed 48 cents, rising  0.9% on the day, closing with a foothold on the $53 handle at $53.11 a barrel despite the Energy Information Administration on Wednesday reporting that U.S. crude supplies had climbed for a fourth week in a row by 2.9 million barrels for the week ended October 4th.

Traders looking for OPEC to balance market

“While energy markets may have been tightening, it is increasingly likely that deeper and longer,” (OPEC),”  cuts will be required to reach a balanced market,” analysts at TD Securities argued.

“However, while the OPEC+ group of producers are likely staying the course with their production curtailment agreement until at least the end of Q1 next year, especially Saudi amid the potential Aramco IPO and Iran/Venezuela amid sanctions and economic turmoil, it is increasingly unlikely the cartel will be able to deliver the required cuts quickly enough to prevent a loosening of conditions next year. Further, there are concerns that Saudi Arabia could have difficulty persuading allies to deepen their curtailments when the cartel meets in December.”

WTI levels

The 21-DMA is the first hurdle for the bulls which is located a touch below  55 the figure. The 50 and  200-DMAs surrounding  the 56 handle while a 50% Fibonacci retracement of the 16th Sep to 3rd Oct lows comes into play in the 57 handle.  On the downside, a break below the 50 handle opens the Nov 2018 lows at 49.39 which are guarding the  46.90 level aheda of the18th Dec lows down at 45.77 ahead of the Dec double bottom lows below 42.50.