Last week was an interesting one for oil traders (USO, quote) and speculators, as crude oil continued to move lower from Monday to Thursday, before bouncing strongly on Friday and closing in positive territory for the day, with a deep wicked candle on the daily chart and associated with high volume.

Indeed Friday’s volume was the highest since the start of the year and created a text book example of stopping volume, with the classic deep wick to the lower body, and narrow spread body to the candle itself, and preceded by the price waterfall of earlier in the week. This is the first sign of the big operators returning and buying in volume in a falling market. This does not mean this market will simply reverse immediately. What it does indicate is this is the start of the accumulation phase, of which we are likely to see further evidence in the next few days and weeks as we move towards the next OPEC meeting in Vienna on the 25th May, when it is expected further targets for supply cuts will be implemented and agreed. Of the key members, Iraq which is the second largest producer in the group has already signalled its intent to follow OPEC’s policy with the country’s oil minister saying the following a recent meeting:

“Now we’re going on the 25th of May to OPEC and we’re definitely going to be in line with OPEC’s final decision and collective decisions,” Jabar al-Luaibi told a conference in Paris.

Much of course will depend on further agreements being reached at the meeting, but with Russia (RSX, quote) maintaining its agreement, and with the original target cut of 1.8 million barrels a day gradually taking effect, it seems likely a further 6 month period of cuts will be implemented at the meeting.

So here we have a classic example of the big operators positioning themselves ahead of the meeting, on the expectation of further supply agreements for both OPEC members and non members. Over the next two weeks we can expect to see further buying with volatility in the $44 to $46 per barrel region, with the meeting on the 25th then providing the catalyst for a move away from this area in due course.

Anna Coulling is a trader with over 16 years’ experience and founder of AnnaCoulling.com