Crude oil price has surged amid the ongoing OPEC+ crisis. The hike in gasoline prices in the US is proof of heightened demand for crude oil.
On Friday, member states of OPEC+ voted on the proposal to increase crude oil output by about 2 million bpd between August and December. The plan would have the coalition increase production by 400,000 bpd in a month. Besides, it proposed for the extension of the current output cuts to the end of the coming year. Analysts had expected OPEC+ to increase its output by about 500,000 bpd as from August.
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However, UAE has opposed some of the clauses in the proposal; an aspect that has boosted crude oil price. On the one hand, UAE supports the coalition’s proposal to increase oil supply in the short term. However, it is seeking for better terms for the coming year.
Saudi Arabia, the alliance’s de facto leader, has called for compromise in ordered to reach a sustainable agreement. The subsequent stalemate between the allies has led to the postponement of the crisis talks to an unknown date.
The OPEC+ drama comes at a time when gasoline prices in the US have hit a 7-year high. As travelers plan for the Fourth of July holiday, regular gas is now selling for $3.13 per gallon. The figure represents a 44% rise from a year ago.
Crude oil price technical outlook
Crude oil price remains on an uptrend, as has been the case since late June. At the time of writing, the benchmark for global oil – Brent futures – was up by 1.27% at 77.08. This is its highest level since October 2018. Over the past five sessions, it has surged by over 5%. On a two-hour chart, it is trading above the 25 and 50-day exponential moving averages. Besides, the formation of an ascending trendline, which is highlighted in black, signals further gains.
In the ensuing sessions, I expect crude oil price to extend its current gains. For as long as the prices remain above the ascending trendline, the bullish outlook remains. In the near term, it is likely to waver at around 77.00 as the bulls target the higher level of 78.00. Lack of enough momentum to remain at 77 is likely to push the support level lower at 76.50 or along the 25-day EMA at 76.00.
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