So OPEC and friends are cutting their oil output.
Will the decision help bust Brent crude oil from its months-long downtrend?
Let’s check out UKOIL’s 4-hour chart:
Brent Crude Oil (UKOIL): 4-hour
In case you were too busy reading about Gigi Hadid’s latest drama with Ye, you should know that crude oil prices are trading higher after a major decision by the Organization of the Petroleum Exporting Countries (OPEC).
See, OPEC and its oil-producing allies *cough* Russia *cough* just decided to cut their oil production by as many as 2 million barrels of oil per day starting November.
That’s the biggest cut since the pandemic and represents about 2% of global oil supply!
Apparently, the OPEC+ gang aims to be “proactive” and “preemptive” by considering a future dip in oil demand.The anticipation before the decision and the bigger-than-expected output cut (markets were pricing in a 500bpd – 1M bpd cut) helped lift Brent crude oil prices from its $84.50 lows.
The Black Crack is now trading closer to $93.50, which is near an area of interest that bulls and bears have been minding since mid-July.
In addition to that, UKOIL’s current prices are also flirting with the 50% Fibonacci retracement of September’s downswing, the 200 SMA on the 4-hour chart, AND a trend line resistance that hasn’t been broken since mid-June.
An extension of October’s upswing could bust Brent crude oil above its trend line resistance.
Consistent trading above the $95 – $97 zone just might push UKOIL back above the $100 mark.
But that’s if markets don’t go back to dumping “risky” assets!
Saudi Energy Minister Abdulaziz bin Salman shared that the real supply cut would be actually be about 1 million to 1.1 million bpd since the OPEC+ gang was already falling short of its output targets anyway.
This week’s NFP report could turn the spotlight back on the major central banks’ interest rate hikes and their potential drag on global growth.
If traders go back to worrying about global growth and future oil demand, then UKOIL could resume its months-long downtrend.
Look out for a rejection near $95, which could drag Brent crude back to its sub-$90 prices.
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