Lots of folks are talking about oil this week.

The Organization of the Petroleum Exporting Countries (OPEC) met in Vienna yesterday to discuss possibly cutting production in order to help boost the price of oil. Representatives of OPEC and non-OPEC countries will meet today to come to some sort of agreement.

There’s lots of speculation OPEC members could agree to cut production anywhere from 500,000 barrels per day (bpd) to 1.5 million bpd. The price of oil has moved a bit higher this week in anticipation of such a cut.

Here’s an updated chart of West Texas Intermediate Crude (WTIC)…

Oil closed yesterday just about right in the middle of its six-month-long trading range between $51 per barrel and $62 per barrel. Back in early October when we pointed out this pattern, we suggested the best trading plan for oil was to buy it when the price of the gooey black stuff came down to the support line of the pattern, near $51. And then sell oil as it ran up to the resistance line of the pattern near $63.

Buying oil here at $58 is a trade that has just about as much potential reward as it does risk. So, it doesn’t look like a very good trade from a risk/reward perspective.

But, if you bought oil back in October, then you’re sitting on a respectable gain for a couple of months. You might as well hold on and see if oil can rally back up towards its resistance at $63.

Just to be on the safe side, though, it’s a good idea to set a stop at the most recent low from late November, near $55 per barrel.

That way, you’ll be sure to lock in a profit on the trade just in case oil starts heading the other way.

Best regards and good trading,

Jeff Clark

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Reader Mailbag

Today, a subscriber brags about his gains using Jeff’s premium trading service, The Delta Report

Jeff’s trading style definitely comports with mine. Made $8,000 on a Delta Report trade today and $11,000 on another last month.

– Harry

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