Crude price eases amid key political events

The focus among investors this
week likely be on crude oil. Its price has been rallying since December and
YTD, it has gained by double digits. There are a few reasons for this. First,
in the annual meeting in December, OPEC members and Russia agreed to lower
production. This was because the cartel believed that the world was in a period
of overproduction. Second, the increase in US production has already been priced
in. Third, the global demand is expected to increase even as the global economy

Another reason why the price of
crude oil has continued soaring is the ongoing talks between the United States
and China. These two countries are important because China is the biggest oil
consumer while US is the biggest oil producer. The two countries are also the
biggest economies in the world. For this reason, any progress in relations is
viewed as being positive for the market. On Sunday, Donald Trump said that he
will extend the March 1 deadline of trade talks citing ongoing progress.

Other than the talks on trade,
traders may also focus on the political events in Nigeria and Venezuela.
Nigeria is the biggest oil producer in Africa. It pumps more than 2.5 million
barrels of crude oil every day. The country went to an election and any
violence could mean less production. In Venezuela, the political environment
continues being increasingly volatile. The opposition leader has called for
international intervention to force Maduro out.

As a result of all these, the
price of Brent crude has fallen slightly today, although more volatility could
happen. The XBR/USD pair’s price has fallen from last week’s high of 67.70 and
moved to a low of 66.87. On the chart below, this price is slightly along the
21-day and 42-day EMAs while the RSI has moved slightly lower to below 50. The
price is likely to resume the upward trend because the fundamental remain quite

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