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Will the Oil Rally Fold after the Doha Summit?

The price of oil will likely be pressured this week after the Doha Summit concluded without an agreement to freeze global oil supply. If Opec continues to pump, oil price should have a supply pull, which challenges the recent rally. 

Oil price falls after Doha ends without output freeze deal (CNBC)

USDWTI 4H Chart 4/18

(click to enlarge)

After almost tagging 26, WTI Crude oil has rallied to tag 42. We can already see the rally become more choppy since late March. The RSI shows that momentum has become more sideways than bullish. The Doha event risk resulted in a negative fundamental for oil prices. The technical picture in the 4H chart is actually still slightly bullish, but price has come down to a critical juncture.

We are seeing some buying around 38, but if price falls below 37.50, it will clear below the cluster of 200-, 100-, and 50-period SMAs in the 4H chart. Price will also likely break below a rising trendline. The RSI will likely push below 30. All these will be technical signs that suggest bears are taking over. The bearish break will open up the 34-34.30 area, which is a key support/resistance pivot area.

If price however hangs on above 38 throughout the 4/18 session, and climbs back above 40, then, we might have to respect the bullish momentum of USD/CAD and look for price to extend above 42. After all, the fact that there was not freeze-deal was not a surprise, especially for Iran who had plans to actually ramp up production.