Saudi’s Insist on Production Cuts at Extended OPEC Meeting

Crude Oil News and Analysis (Brent, WTI)

• The Saudis call for further cuts in oil production but fail to win overwhelming support
• Oil technical levels should be noted after gapping higher at the open
• IG client sentiment hints at a continuation of the decline despite the gap to the upside
• The analysis in this article is used chart patterns and key Support and resistance levels. For more information visit our comprehensive website Educational library

The Saudis are arguing for more OPEC cuts but will have to do it alone for now

Yesterday’s OPEC meeting was nothing but business as usual. Usually, OPEC countries have a pretty good idea of ​​what will be agreed upon before the OPEC meetings, making the gatherings somewhat of a formality. This time, however, the meeting stretched beyond its usual duration as the Saudi delegates insisted on the need for further cuts to revive oil prices from low levels – a view that failed to garner widespread support.

In the end, a compromise appears to have been reached, with Saudi Arabia cutting its production by 1 million barrels per day from July. The cuts add to the current 3.66 million barrels per day (bpd) of cuts that are in place to “stabilize” oil markets. Throughout 2022, US President Joe Biden has been adamant about lowering oil prices, which had a negative impact on the general price of commodities. After the release of a portion of the US Strategic Petroleum Reserves (SPR) to the broader market, oil prices have turned significantly lower. At the peak, WTI was trading at $130 a barrel.

Technical levels of crude oil to consider

West Texas Intermediate Crude

The market rallied at the open, buoyed by news that Saudi Arabia would cut production by 1 million barrels per day. However, the market has pulled back a good chunk of the move as global demand concerns continue to weigh on the commodity. The sharp change in trend highlights the psychological level at $70 flat if the bearish momentum is gathering pace. $67 is the next relevant level of support although much of its effectiveness as false support may have been removed after the Biden administration admitted it would take years to replenish Strategic Reserve reserves. The Energy Department previously indicated that it will restore lost reserves when oil prices remain between $67 and $72 for an extended period. Resistance levels are seen at $75.75 – the close before the previous gap in early May – as well as the longer-term level around $77.40.

WTI Crude Oil futures daily chart (CL1!)

Source: TradingView, prepared by Richard Snow

Brent crude oil

Brent crude oil price surpassed the $77 level and headed towards $78.60 before reversing during the day. In the previous couple of days, Oil actually advanced from the recent swing low around $71.50, even closing above the $75.50 support area, but that momentum seems to be fading.

To the upside, if oil prices can rally from here, $82 shows resistance with $89 a fair distance away. On the short side, if $75.50 fails to sustain swing lows around $71.50, it will re-emerge as support.

Brent crude oil daily chart

Source: TradingView, prepared by Richard Snow

IG client hints at continued oil selling

oil– American crude:Retail trader data shows that 79.89% of traders are net long, with the ratio of traders buying to selling at 3.97 to 1.

We usually take a standpoint opposed to the sentiments of the masses, The reality of traders suggests the long netoilUS crude oil prices may continue to decline.

The number of long traders increased by 11.72% compared to yesterday, and 8.52% higher than last week, while the number of short traders is 1.31% higher than yesterday, and 2.15% higher than last week.

Traders are long in positions longer than yesterday and last week, giving us a combination of current sentiment and recent changes Stronger Oil – Mixed Crude Oil trading bias in the US.

– Posted by Richard Snow for DailyFX.com

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