The recent OPEC+ meeting held over the weekend seems to have had a limited impact on the price of crude oil. Looking at the chart data, WTI oil opened at $76.72 per barrel on Monday, just slightly higher than the Friday closing price of $76.57. This indicates that the decision made by oil producers has left the market somewhat uncertain about its direction going forward.
On one hand, there is a bullish argument suggesting that restrictions on oil production to maintain price levels will continue. According to Reuters, OPEC+ members have agreed to extend production cuts of 3.66 million barrels per day until the end of 2025. However, on the other hand, it has been reported that eight OPEC+ countries are planning to gradually phase out voluntary cuts of 2.2 million barrels per day from October 2024 to September 2025.
Analysts from Goldman Sachs have weighed in on the outcome of the meeting, expressing a more bearish sentiment towards the market. They highlight that the communication of a gradual unwind reflects a strong desire among certain members to increase production, given their high spare capacity. This could potentially lead to increased supply in the market, putting downward pressure on oil prices.
Technical Analysis of the Oil Chart
Looking at the WTI crude oil chart, it appears that the market is breaking away from the previous upward trend that was observed in early May. Despite attempts by bulls to push the price higher, a false breakout occurred at the $80 per barrel level on 29 May, indicating a lack of strong buying support. This led to bears taking control and pushing the price below the lower boundary of the previous upward channel, forming a new downward channel in red.
According to technical analysis:→ the price is currently hovering near the median line of the red channel, suggesting a temporary balance between supply and demand;→ an important support level lies at $75.75, which held firm back in the winter months. A potential bullish comeback would require strong fundamental drivers, with resistance likely at the upper boundary of the downward channel. However, if geopolitical tensions in the Middle East remain stable, bears may continue to exert pressure to break the $75.75 support level.
The recent OPEC+ meeting has left the crude oil market in a state of uncertainty, with conflicting signals from producers and analysts. The technical analysis of the oil chart points towards a potential downward trend, with key support levels to watch. It remains to be seen how the market will react in the coming weeks, especially in light of geopolitical developments and supply-demand dynamics.