Oil Declines 2% on OPEC+ Uncertainties
OPEC+ discussions uncertainties and US debt deal problems cause oil to decline by 2%.
FUNDAMENTAL OVERVIEW
The market’s risk-on attitude was dampened by worries about the U.S. debt ceiling agreement, and the supply outlook was complicated by conflicting statements from key producers ahead of their conference this weekend. Oil plummeted by about 2% on Tuesday.
By 08:59 GMT, Brent crude futures had dropped $1.36, or 1.8%, to $75.71 per barrel. West Texas Intermediate (WTI) crude for the United States fell $1.19 or 1.6% to $71.48 a barrel as of Saturday. Due to a U.S. federal holiday, there was no settlement on Monday.
As the world’s largest consumer of oil, several hard-right Republicans expressed their potential opposition to a deal on Monday, but Democratic President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy were confident that the agreement would be approved.
The market is also being pressured by a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, notably Russia, on June 4; whether they will increase their supply cutbacks in the wake of a recent price decline is questionable.
Last week, Abdul-Aziz bin Salman, the energy minister for Saudi Arabia, urged short-sellers who are relying on a decline in oil prices to “watch out” as a possible indication that OPEC+ may reduce output.
OPEC+ reduced its oil production by an additional 1.2 million barrels per day (bpd) in April, according to calculations by Reuters, bringing the total amount of cutbacks to 3.66 million bpd.
Data from China’s manufacturing and service sectors, which are due out later this week, will also be closely watched for hints about the revival of the country’s gasoline demand. China is the world’s top oil importer.
BRENT CRUDE OIL TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
- Brent Crude Oil is trading in the down channel.
- Brent Crude Oil is currently trading below 5&50 SMA.
- RSI is in buying zone which suggests bullishness and Stochastic is suggesting a downtrend.
- Brent Crude Oil resistance is at 77.32 & its immediate support level is 76.05
HOW TO TRADE BRENT CRUDE OIL
Brent crude oil is currently trading down; the price attempted to rise higher but encountered resistance and turned around; at this point, the trend line is supporting the price; if it is broken, we could expect it to decline.