Will Brent oil hold above 50-DMA?

Brent oil is trading above the 50-DMA level of $55.34 after having suffered sharp losses on Monday despite record OPEC compliance.

OPEC Monthly Oil Market Report released yesterday showed the cartel cut its crude oil production by 890,000 bpd from December to average 32.14 million bpd in January. The data confirmed IEA’s claim that the deal has achieved a record initial compliance rate of 90%.

Eyes API report

Despite the record compliance, prices fell from the high of $56.79 to $55.40 levels on Monday. Moreover, the OPEC related good news has been priced-in by the markets and the investors are now concerned about the rising US supplies.

The 50-DMA support could be breached today if the American Petroleum Institute (API) shows a big build up in oil and gasoline inventories.

Brent Technical Levels

Prices have been restricted largely to a narrow range of $53.50 - $57.50 for the last two months. A break below $55.34 (50-DMA) could yield a sell-off to $54.48 (Feb 8 low). On the higher side, breach of resistance at $55.93 (10-DMA) would open up upside towards $56.85 (Friday’s high).