Crude oil price on the Brent crude benchmark is virtually unchanged on the day, with shallow trading volume as the market awaits the outcome of Wednesday’s meeting between the Organization of Petroleum Exporting Countries (OPEC) and its allies; the so-called OPEC + alliance.
Early feelers this week indicate that Saudi Arabia may push for a new output cut of 2 million barrels per day, which increases the present production cut quota of 9.7million barrels per day. Considering the level of effort it took to get Russia, Mexico and other recalcitrant members on board the last time, this meeting will make for an interesting one.
Also in the news, the International Energy Agency provided a slightly upbeat forecast for 2020. The IEA estimates that global oil demand this year will average 92.1 million barrels per day, which represents a drop of 7.9 million barrels per day from the 2019 forecast figures. However, the market was unmoved by the IEA projections and has chosen to focus conclusively on the Wednesday meeting.
Technical Outlook for Brent Crude
Crude oil price on the day is virtually unchanged and remains close to the underside of the 44.16 resistance line. This scenario is like the calm before the storm, as crude oil price watchers eagerly await the outcome of the Wednesday virtual meeting of the OPEC + alliance.
If there is an agreement for further output cuts, then we could see Brent crude surge above the 44.16 resistance. A confirmation of the breakout may allow the asset aim for the 48.33 resistance (2 March low), effectively closing the price gap of 2 March/3 March 2020.
If there is no agreement on an output cut from the OPEC+ meeting, then a pullback may result, targeting 41.43 or 38.56. A breakdown of 38.56 brings 35.61 and 31.69 into focus, with multi-year lows at 28,38 and 24.68 only becoming relevant if the decline is considerable.