- Crude oil price initially jumped higher on unconfirmed reports that an OPEC+ deal on production cuts has been
- Saudi Arabia and Russia are leading the talks to agree on a production cut of at least 10 million barrels per
- Investors are eagerly awaiting news from the meeting with a focus on key technical levels of $17 and $33
Crude oil price has been extremely volatile today as investors await news from the crucial meeting between OPEC and Russia that is expected to result in an agreement to cut oil production in order to boost oil market price.
Fundamental analysis: New agreement possible
Crude oil price jumped to above $28 at one moment during today’s session after Reuters reported that OPEC+, consisting of OPEC and its allies, including Russia, is debating a new plan including cuts as big as 20 million barrels per day.
“That is a global deal,” the OPEC source said to Reuters. The media giant also said that a source from the Russian delegation confirmed talks on 20 mb/d cuts.
However, the buyers couldn’t sustain positive momentum as big investors prefer to wait for an official confirmation from the meeting. As a result, the price then retreated lower to nearly $25 in a very volatile trading session.
An agreement on cuts as big as 20 mb/d would surprise many investors, as media outlets have so far reported on the proposed cut of about 10m barrels a day, or roughly 10% of pre-crisis demand.
It appears that there is a positive environment surrounding the talks as Reuters reports that Russia and Saudi Arabia “had managed to remove their main obstacles to agreeing a new deal on oil cuts”.
Both countries are highly dependent on oil exports and they will be hoping that an agreement can be reached. Invezz reported earlier that Dan Yergin, one of the most recognized oil experts, warned that oil price could go south of the $20 mark on the projected crash in demand for the “black gold” in April.
Technical analysis: Oil price stuck in the middle
Crude oil price is likely to make a sharp move irrespective of the meeting outcome. However, the direction of the move will fully depend on whether the agreement between major oil exporters can be reached today.
Crude oil price printed a 18-year low two weeks ago near the $19 mark. A failure to reach an agreement is likely to push the price below this zone with the next major support located around the $17.50 handle.
On the upside, the buyers are likely to push for a test of the horizontal resistance around the $33 mark, while the mid-term resistance for the bulls is located at $42.
Commodity investors have their eyes set on the outcome of the OPEC+ meeting as major oil exporters are trying to reach a deal on deep cuts in production levels. Crude oil price is likely to travel toward either the $17 handle, or $33 depending on the outcome of the meeting.