Crude prices have moved off early morning lows on Monday and charts signal further upsides in the commodity despite reports that oil producers inside and outside the OPEC bloc have failed to reach an output freezing deal at their Qatar meeting on Sunday.
Short-term technical charts show that the upward correction from the multi-year lows recorded in January to continue and levels above $50 may be reachable in the coming weeks. (See the chart below)
Moreover, the producers are hopeful to continue discussions and bring more players to the table before the June OPEC meeting.
Saudi Arabia had warned that all producers including Iran must come in agreement with a production cut for Riyad to cooperate or else it would even be ready to increase its production.
Oil producers have been reeling under excessive slide in the price of the commodity since mid-2014, even though a slight portion of the fall has been reversed over the past few months.
Brent for spot delivery had fallen below $30/bbl n January but has come off the lows sharply and touched a 4-month high of $44.90 earlier this month.
Uncertainties surrounding the possibility of an output freeze led to the drop of the commodity last week; on Monday (18 April), the spot Brent opened nearly 7% below Friday's close.
Charts show that as long as the $37 support, which lies on the 23% Fibonacci retracement of the August 2015 to January 2016 slide and endorsed by the 14-period simple moving average on the weekly chart, Brent crude has its upward chances high.
Northward, the commodity will find resistance near $46 as shown by the 50-week moving average, and $48, the 50% retracement of the five-month slide to January. Further up, $54.30 will be the level to watch out for.
Sunday's Doha talks saw the Organisation of the Petroleum Exporting Countries (OPEC) and producers outside the association trying to agree that average daily crude oil production in the coming months would not exceed levels recorded in January.
Qatari Energy Minister Mohammed Saleh al-Sada said consultations would continue between the parties until an OPEC meeting in June. Oman's Oil Minister Mohammed al-Rumhy said one reason a deal could not be reached was that not all OPEC members were present.
Energy stocks were also down following the Doha outcome with shares of Santos falling 6%, Oil Search down 4% and Woodside Petroleum easing by 0.8%.
In February, Russia, Saudi Arabia, Qatar and Venezuela agreed to freeze output if other producers would join them.