In a bid to stabilize oil markets, OPEC+ has decided to uphold its voluntary output cuts, with plans to reassess production levels in March. This announcement coincides with a period of declining oil prices, following a peak around $84 per barrel at the end of January.
The impact of OPEC’s production cuts has been somewhat mitigated by increased output from non-OPEC oil-producing nations. Notably, the United States has been actively ramping up its oil supply, achieving record production levels in 2023. However, projections suggest a slowdown in US supply growth, dropping to 300,000 barrels per day compared to 800,000 bpd the previous year.
Brent crude oil is poised for a significant weekly loss, with prices dipping below the 50-day simple moving average (SMA) after breaching the 200-day SMA earlier in the week. Economic factors such as decisions by the Federal Reserve and the Bank of England to maintain restrictive interest rates have contributed to market uncertainty. Additionally, concerns about China’s economic recovery, particularly in the manufacturing sector, have weighed on sentiment, leading to a sharp decline in the SSE Composite Index.
The support for Brent crude lies around the $77 mark, while resistance is expected at the 200 SMA. Meanwhile, WTI oil prices have also seen a notable decline, tracking closely with Brent crude. Should bearish sentiment persist, prices could find support at the $72.50/$72.00 level, with resistance at the 200 SMA around $77.40.
Overall, the oil market remains influenced by a complex interplay of supply and demand dynamics, with geopolitical factors and economic indicators shaping investor sentiment. Understanding the fundamental drivers of oil trading is essential for navigating this volatile market landscape.
Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be construed as financial or investment advice. Trading in oil futures and commodities involves significant risk and may not be suitable for all investors. Past performance is not indicative of future results. Always conduct thorough research and consider consulting with a qualified financial advisor before making any investment decisions.
The article is inspired by: DailyFx.com