Crude Oil Price Forms Double Bottom Amid Suez Canal Blockage

Crude oil price is finding support from the current blockage in the Suez Canal. WTI futures closed Friday’s session at $60.80. This marked an increase by 4.01%. However, Brent futures were down by 0.60% at $64.37. Investors are now keen on next week’s OPEC+ meeting.

OPEC+ Upcoming Meeting

Investors looking to trade oil are keen on the OPEC+ meeting scheduled for 1^st April. OPEC and its oil-producing allies have offered support to crude oil price by making the decision to cut production in the wake of unstable global oil demand.

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In its March meeting, the alliance committed itself to continue the current output levels into April. Saudi Arabia extended its voluntary output reduction while Russia and Kazakhstan were permitted to heighten production by 130,000 and 20,000 bpd. In next week’s meeting, the focus will be on the viability of maintaining the current production levels or making some upward adjustments in light of the current phase of global oil demand. The group’s decision is one of the events that will influence crude oil price in the upcoming sessions.  

Suez Canal Blockage

Crude oil price is also finding support from the Suez Canal situation. A large container ship wedged across the Suez Canal, one of the crucial shipping routes in the world, on Tuesday. 50 ships, carrying about 12% of the world’s trades, pass through the canal on a daily basis.

With the 200,000-tonne blockage expected to take weeks to clear, there are concerns over the squeeze in the supplies of crude oil and other refined goods. The amount of seaborne crude oil in 2020 was 39.2 million bpd. Of this amount, 1.74 million bpd was transported via the Suez Canal. On Friday, Kpler -a data intelligence company – indicated that 10 vessels with 10 million barrels of crude oil were stranded at the canal’s entry points.

WTI Technical Outlook

On a 4-hour chart, WTI futures are trading along the 50-day exponential moving average and above the 20-day EMA. The crude oil price formed a double bottom at around $57.41. If you are familiar with our courses, you are aware that a double bottom is a bullish pattern. The price has since passed the neckline at $60 to close Friday’s session at 60.80. At the onset of the next week, the bulls will be testing $62.

However, $62 remains an important resistance level for crude oil price. If the bulls manage to move the price past that mark, the next target will be $64. On the flip side, the commodity is likely to continue trading within its current range of between $62 and $57.41 depending on the outcome of the upcoming events.