A cut
in Saudi Arabia's oil supply and lower U.S. oil stocks helped offset price
pressures from fuel demand, which is slowing due to stalled vaccine rollouts
and contagious new coronavirus strains. The market is waiting for the next
shoe to drop in the oil market.
Even the currency effects that have been an
occasional driver of the market have dried up with the U.S. dollar also very
stable at current levels.
Saudi Arabia is set to cut output by 1 million barrels
per day (bpd) in February and March, and compliance with output curbs by the
Organization of the Petroleum Exporting Countries and allies, together called
OPEC+, has improved in January.
A 9.9 million barrel drawdown in U.S. oil
inventories last week and forecasts for a small drop in U.S. oil production in
February are also helping to support the market. Ahead in this week crude
price may witness huge volatility within the range of 3680-4090, where buying
near support and sell near resistance would be strategy.
U.S. natural gas
futures roses over 6% from the weekly low and continue to hover right above
the 50 day EMA.
There are expectations of a jump in heating demand over the
near-term and forecasts calling for colder temperatures into the weekend and
possibly the first week of February. Going forward, we expect prices may
trade with sideways to bearish bias whereas support is seen near 175 levels
and resistance is seen near 210 levels.
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