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Why Is Crude below the Psychological Level of $33.87?

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WTI crude rose 2.86%

On February 25, 2016, WTI crude oil (UWTI)(DBO) futures for April closed at $33.07—2.9% above the previous day’s closing. Exploration and production companies such as ExxonMobil (XOM) rose 0.6%. Chevron (CVX) was flat. ConocoPhillips (COP) rose 0.3%, respectively, as of February 25, 2016. The rise in crude oil was mainly due to the report claiming that OPEC and Russia would meet in March for a production cap. However, investors must understand that the crude oil market was already oversupplied by more than 1.5 million barrel per day. Although Iran agreed to the above development, it isn’t ready to cap its domestic production until its exports reach the pre-sanctions level from 2012. Investors should note that during the subprime crisis, crude touched $33.87 on a closing basis as of December 19, 2008. Going forward, the prices of $33.87 and $26 are crucial psychological price levels for crude oil. The other important price point for crude oil was near $17.45 during November 2001.

In this series, we’ll discuss the following points for oil and gas investors.

  • The next big event for energy investors
  • Russia’s new relationship with Asia and how it could impact the crude oil market
  • Moving averages and analysts’ estimates for different energy streams

The above graph shows crude oil between the important price zone. In the next part, we’ll discuss what could be the biggest factor for crude oil, apart from Saudi Arabia, going forward.

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