Brent crude oil price has rebounded from its lowest level in the last 14 months. The bounce is being attributed to the surprise move by OPEC+ to cut output by 1.15 million barrels per day. Our analysis shows that the latest production cuts can send oil prices above $100 per barrel once again.
The week started with a massive gap-up opening in Brent oil prices. The price of the global benchmark soared by 6.3% during the first trading session of the week. On Tuesday, the price action remained positive till press time, Brent crude price was up 1%.
OPEC+ Cuts Equivalent To 3.7% Of Global Demand
The decision to lower the daily production of crude oil was taken by the major oil-producing nations, including Saudi Arabia, Russia, and Iraq. The move is expected to anger the West, which is already dealing with sticky inflation. After last year’s production cuts, the tension between Saudi Arabia and the United States became very evident.
The Chinese Purchase Managers’ Index saw a decline in March, suggesting that the economy is still far from fully recovered. Nevertheless, the Brend crude oil price remained unfazed by the figures, and it gained another 1%. While many analysts are opining that a $100 per barrel oil price is only a matter of time, Morgan Stanley believes that the latest production cuts point towards a weakness in the oil markets.
Brent Crude Oil Price Breaks Above Key Trendline
Apart from the fundamental factors, Brent oil prices also respect key levels on the chart. In the last two weeks, the price has been up by 21% and has gained a lot of momentum. It is also evident from the following chart that the price recently broke below the symmetrical triangle pattern.
However, the announcement of production cuts has sent the price above the trendline once again. If the price closes a couple of days above this trendline, then I expect a retest of the $89 level in near term. This will be a major level for Brent crude oil price prediction as a reclaim of this level can send the price to $100 very soon. This level comes from the 200 moving average on the daily chart.
