Crude oil price prediction as OPEC+ announces a surprise production cut

A surprising announcement over the weekend from OPEC+ has sent the WTI crude oil price gaping higher. The cartel said it would cut oil production by more than 1 million barrels per day, giving up assurances that it would hold supply steady.

As a result, oil prices gapped higher at Monday’s opening. Oil drives inflation, and the developments over the weekend are a blow o developed markets that are fighting inflation.

In other words, OPEC+ is in the driving seat again. The cartel tries to keep oil prices at certain levels, and it uses oil production cuts to achieve them.

The oil production cut triggered a surge in oil prices and dashed hopes of contained inflation. Thus, it affects all markets, and everyone is looking at where oil prices will go next.

WTI crude oil price is still bearish while below $95

After failing twice at the $120 area, the WTI crude oil price tumbled and entered the bearish market territory. It made a sequence of lower lows and lower highs, a typical formation during bear markets.

However, it found support below $70/barrel and bounced. Moreover, a falling wedge pattern might be seen on the daily chart.

Nevertheless, while the fundamentals scream for more upside, the bearish sentiment should persist while the price remains below the pivotal $95/barrel area. Only a daily close above the pivotal area would push the WTI crude oil price expectations higher.

Summing up, the announcement over the weekend is a concerted move in response to a bearish trend in crude oil prices. As a commodity, oil responds to changes in supply and demand. The supply side was affected this time, and the price gapped higher. However, the reaction might be a spike in a longer-term bear market.