Brent crude oil price rally stalled at the 100-day moving average after news that the OPEC+ meeting cancelled and probably will be brought forward to a scheduled meeting on June 9-10. OPEC+ member agreed in April to cut crude oil production by 9.7 million barrels per day, almost 10% of global production output.
The oil production cuts started on May 1 and are set to run through June. Under the deal, the production cuts will then be tapered back to 7.7 million barrels per day from July through the end of the year, and 5.8 million barrels per day from January 2021 through to April 2022.
Coronavirus relief packages from governments around the globe, and intervention in money markets from central banks boosted investors sentiment and now bets for a fast recovery increases.
Yesterday, the Energy Information Administration (EIA) report showed that U.S. inventories fell by 2.08 million barrels and stocks at Cushing, Oklahoma declined by 1.7MB. This is well below the projected rise of 3.0 million barrels and also a sharp drop from the 7.9 million barrels surplus on the crude oil inventories the last week.
The Brent crude oil price is 0.55% higher at $39.79 managed to recover early losses and now positioning for a test of the 100-day moving average. Brent price short term outlook is positive now but needs a break above the 100-day SMA in order to extend the gains.
On the downside, initial support for Brent crude oil price is at $38.76 the daily low. Next support area for crude oil price will be met at $36.87 the low from June 1st trading session. Moving lower, the next support stands at $34.98 the low from May 29.
On the contrary, the Brent crude oil price initial resistance stands at $40.18 – $40.53 the 100-day moving average and the daily top. If the Brent crude oil price move above $40.53, the next hurdle will be met at $45.04 the low from March 6 which will also signal the closing of the March gap down. Next resistance stands at $50.38 the high from March 6.