Crude oil price was trading higher on Thursday as the market reacted to the decisions made by OPEC+ on production quotas. Investors looking to trade oil had been eyeing the April meeting for cues on the direction of oil price in the second quarter. WTI futures closed Thursday’s session up by 3.05% at $61.25. Similarly, Brent futures rose by 2.57% to trade at $64.64.
Details of April’s OPEC+ Meeting
In the March meeting, analysts expected the alliance to commence the gradual increase in production after announcing significant output cuts at the start of the year. As such, it came as a surprise when OPEC+ decided to extend the reductions into April. The decision offered support to crude oil price amid demand concerns. Last week, analysts had eliminated the surprise element by predicting the continuation of the over 7 million bpd cuts.
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However, the decision by OPEC+ has yet again caught the market by surprise. In May, the coalition will increase production by 350,000 bpd. A similar amount will be released into the market in June. In July, the alliance will increase its output by 450,000 bpd. Saudi Arabia, which voluntarily cut its production by one million bpd has indicated that it will start increasing its oil output in May.
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Crude Oil Price Technical Outlook
On a 4-hour chart, crude oil price is slightly above the 20 and 50-day exponential moving averages. On Thursday, the WTI futures ended the session at $61.25, a high of 3.04% as the markets closed for the Easter holidays. Notably, the benchmark for US oil has formed a bearish flag that spans from mid-March.
A mixture of bullish and bearish indicators is a sign that the noise in the oil market is likely to continue, at least in the short-term. In the coming week, the bulls will be testing $64. At that level, crude oil price is likely to experience some resistance before moving lower. The subsequent decline will have the support levels at the psychological points of $62 and $60. However, this thesis will be invalid if the price remains within its current range of between $57 and $62.