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.
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
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.