The recent OPEC+ meeting over the weekend had a mixed impact on the price of crude oil. Despite the decision made by oil producers to extend production cuts of 3.66 million barrels per day until the end of 2025, the price of WTI oil opened today at $76.72 per barrel, only slightly higher than Friday’s closing price of $76.57. This ambiguity has led to mixed reactions among market analysts and investors.
The bullish argument following the OPEC+ meeting is that restrictions on oil production will continue to help maintain the price of crude oil. However, the bearish argument comes from the fact that eight OPEC+ countries have already signaled plans to gradually phase out voluntary cuts of 2.2 million barrels per day from October 2024 to September 2025. Analysts from Goldman Sachs viewed the overall results of the meeting as more bearish for the market due to the desire to increase production among several members with high spare capacity.
Looking at the technical analysis of the WTI crude oil chart, there are several key indicators to consider. The market is currently breaking the upward trend that was previously observed, as shown in blue on the chart. Despite attempts by bulls to resume the upward trend, there was a false breakout of the psychological level of $80 per barrel on 29 May, indicated by an arrow on the chart. Subsequently, bears regained control and pushed the price below the lower boundary of the previous upward channel, leading to the formation of a downward channel, shown in red, since April.
According to the technical analysis:
– The price is near the median line of the red channel, indicating temporary equilibrium between supply and demand.
– An important level to watch is $75.75, which previously provided support at the end of winter.
– If bulls attempt to push the price higher, they may face resistance at the upper boundary of the downward channel.
– Geopolitical tensions in the Middle East could affect the price of crude oil, with potential impacts on inflation and the upcoming U.S. presidential elections.
The recent OPEC+ meeting had a mixed impact on the price of crude oil, leading to uncertainty in the market. While production cuts are set to continue until the end of 2025, the gradual unwind of voluntary cuts by some OPEC+ countries may lead to increased supply in the future. The technical analysis of the crude oil chart suggests a shift in market dynamics, with potential support at $75.75 and resistance at the upper boundary of the downward channel. Geopolitical factors will also play a role in determining the future direction of crude oil prices. Investors and traders should closely monitor these developments to make informed decisions in the commodity market.
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