The OPEC+ meeting over the weekend did not have a substantial impact on the price of crude oil. As the chart shows, WTI oil opened today at $76.72 per barrel, while on Friday it closed at $76.57 – indicating that the decision made by oil producers is ambiguous.
The bullish argument is that restrictions on oil production to maintain its price will continue. According to Reuters, on Sunday, OPEC+ members agreed to extend the production cuts of 3.66 million barrels per day until the end of 2025.
The bearish argument is that eight OPEC+ countries have already signalled plans to gradually phase out voluntary cuts of 2.2 million barrels per day from October 2024 to September 2025.
Goldman Sachs analysts overall assessed the results of the meeting as more bearish for the market. “The communication of a gradual unwind reflects a strong desire to bring back production of several members given high spare capacity,” they wrote.
The WTI crude oil chart shows that the market is breaking the upward trend (shown in blue), which we mentioned in our review on 10 May.
Since then, bulls attempted to resume the upward trend, but this only resulted in a false breakout of the psychological level of $80 per barrel on 29 May (indicated by an arrow).
Afterwards, bears regained control and sharply pushed the price below the lower boundary of the blue upward channel, making the downward channel (shown in red), which began in April, more relevant.
According to the technical analysis of the oil chart:
→ the price is near the median line of the red channel – a sign of temporary equilibrium between supply and demand;
→ below the current WTI crude oil price is an important level of $75.75, which provided support back at the end of winter.
If the bulls attempt a comeback (which would require fundamental drivers), the upper boundary of the downward channel may resist the price.
If the geopolitical situation in the Middle East does not escalate, the bears may continue to exert pressure aiming to break the $75.75 level – which would likely slow inflation and benefit the current U.S. administration ahead of the upcoming presidential elections.
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