70.04 USD -2.02%
  • XAG
    23.96 USD -0.14%
  • XAU
    2010.5 USD 0.48%
  • XCU
    3.73 USD -1.34%
  • XPD
    1478 USD -0.78%
  • XPT
    1048 USD 0.64%
  • ALU
    2243.47 USD -2.23%
  • RICE
    18 USD -1.75%
    74.17 USD -1.32%
    14.35 USD -0.66%
  • NG
    2.27 USD 0.27%
    256.22 USD -1.15%

OPEC+ unexpectedly cut oil’s output

OPEC+ reversed course and lowered supply by 100 000 barrels a day for the next month. Crude attacked $90 level.

Reversed course

The Organization of Petroleum Exporting Countries and its allies unexpectedly cut oil supply by 100,000 barrels a day for the next month. It is considered a big surprise because OPEC lifted the supply at the latest meeting. Moreover, that lift was connected to Biden’s visit to Saudi Arabia to lobby for lower prices of a commodity. It is a fact that ‘Biden’s hike in supply’ was considered symbolic. But still, the reversed course is a surprise.

Related article: Crude oil is down 30.56% from June’s top

This information came on Monday while Europe struggles with the energy crisis and Western countries are very close to the Iran nuclear deal. This deal could impose a bigger supply of crude oil into the market. Therefore, the OPEC+ step could mean getting ready for a change of supply. 

Price above $90/barrel

The week started in green numbers for crude oil, when West Texas Intermediate crude price surged by 4.11%, above the $90 level. It is clearly visible that any small information from the producers or oil-connected participants can spark a significant move in markets.

Also read: Crypto adoption increases – investors need to stay vigilant

Futures on crude oil hit the resistance created from Wednesday’s POC (Point of control – the biggest traded volume of the day) at $90.31. The next resistance could be monthly VWAP levels at $91.31 and $94.14. The support area could be allocated between $85.24 and $86.80. 

30 minutes chart of CL (Crude Oil Futures), Daily Market Profile. Source: Author's analysis

30 minutes chart of CL (Crude Oil Futures), Daily Market Profile. Source: Author’s analysis

Price-watching mode

Volatility continues, and unexpected moves like this could signify turbulence in the near future. OPEC+ is in ‘price-watching mode,’ and it is ready to make tiny correlations based on the market development. A higher amount of small price adaptations from OPEC could be seen while the energy crisis in Europe deepens, and open taps in Iran could be a reality.

Tomas is a professional trader and money manager on foreign exchange market from 2014. His main domain are commodities. Experiences gained due this period are transformed to consul...


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