Brent Crude Oil Price Retreat But Positive Momentum Is Intact
Brent crude oil price trade lower for the second consecutive trading session as investors assessed the new OPEC+ agreement for an extension of the oil production cuts. OPEC+ member agreed in April to cut crude oil production by 9.7 million barrels per day, almost 10% of global production output, while on Friday extend the cuts for one more month to the end of July.
Crude oil supported by better data from China. China’s crude imports hit a record high of 11.3 million barrels per day in May. The storm activity in the Gulf of Mexico also creates a supply disruption As approximately 34.02% of the current oil production in the Gulf remains closed.
The World Bank yesterday projected that global economic activity would shrink by 5.2% this year, the fourth-worst global downturn over the past 150 years. Last week, the Energy Information Administration (EIA) reported that U.S. inventories fell by 2.08 million barrels and stocks at Cushing, Oklahoma declined by 1.7MB. This was 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 1.67% lower at $40.09 trading close to daily lows, and now sellers might test the critical 100-day moving average. The technical picture for crude oil remains positive for the short term above the 100-day moving average, but a break below that support might be the start of another leg lower.
On the downside, first support for Brent crude oil price is at $39.83 the daily low. Next support zone for oil price will be met at $39.02 the 100-day moving average. If the crude oil price breaks lower, the next target stands at $37.29 the low from June 1st.
On the other hand, Brent crude oil price immediate resistance stands at $41.42 the daily high. If the crude oil price breaks above $41.42, the next hurdle will be met at $43.32 the high from yesterday’s trading session. Next resistance stands at $45.65 the high from March 9th.