Crude oil WTI supported at $64 amid OPEC-Russia unprecedented alliance

• Saudi Arabia and Russia are working on a 10 to 20-year unprecedented agreement. 
• Crude oil might be vulnerable to slide further in the short-term.

US crude oil is trading at around $64.10 a barrel, down more than 1% on Wednesday as Saudi Arabia and Russia are considering to form an alliance for the next 10 to 20 year in order to stabilize oil prices. 

The Organisation of the Petroleum Exporting Countries along with Russia have been engaged in supply cuts in order to deal with the excess of supply; rising output from the US shale producers contributed to cap prices. 

The two big oil-producing countries are now working on a long-term agreement to expand their cooperation that started in January 2017 after crude prices sold off as low as $26 a barrel in early 2016. 

A 10 to 20 year deal between Russia and OPEC would be unprecedented and seen as a bullish news for oil in the long term, according to analysts. 

"We are working to shift from a year-to-year agreement to a 10-20 year agreement…We have an agreement on the big picture but not yet on the details”, said Saudi Crown Prince Mohammed bin Salman.

Meanwhile, earlier in the day the EIA Crude Oil Stocks change showed a build of 1.643 M in the week ending March 23rd versus the -0287 M expected, therefore shedding a negative sentiment on the black gold. Crude sold-off almost $1 after the bearish news. Adding to the selling pressure is the positive sentiment on the US Dollar as usually, a stronger dollar weighs on the prices of crude as foreign investors prefer to buy oil barrels when the US Dollar is cheaper. 

Crude oil WTI daily chart

After establishing a double top at around 66.70 three days ago, crude is retracing towards the vicinities of the 64 level. Although the longer-term bullish momentum is still in place, it remains to be seen what is going to happen in the short-term. Support is seen at 63.40, which is the 61.8% Fibonacci retracement from the January-February down leg, followed by 62.38, which is the 50% Fibonacci retracement level and a previous demand zone. At this stage it seems that a pullback to the ascending bullish trendline (red line) would be the most likely event, although the market might find resistance at the 64.85 level, 78.6% Fibo and the 66.00 handle in the meanwhile.