A Reuters news report monitored over the newswires is saying that the OPEC ministers have reached a consensus to cut crude oil production output by 1.5 million barrels per day to stabilize prices. Reuters is quoting an unnamed source close to the talks, even though there is no official confirmation yet.
The initial market reaction of Brent crude price was for a mild intraday bounce which has lifted the benchmark of its intraday lows. As at the time of filing this analysis report, Brent crude price had risen 0.35% to 51.17, after hitting intraday lows at the 50.64 support level. Similarly, the WTI rose 0.13% on the day to hit 47.42.
Crude oil price response to the Reuters report is a bit muted, and markets will wait to see if the output cuts would protect the crude oil price from further coronavirus shocks.
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Technical Outlook for Brent Crude Price
Crude oil price on the Brent crude benchmark experienced an intraday bounce on the 50.64 support line which had been identified in previous analyses as the immediate downside support. However, the crude oil price is still trading lower on the day and continues to have a bearish bias about it after Tuesday’s surge.
If the crude oil price continues on its positive moves from the OPEC + output cuts, then 53.26 can be a logical target. However, the 1-hour chart reveals that price is in a falling wedge, and is currently encountering intraday resistance at 51.39. Therefore, any upside breakout has to clear this resistance and the wedge’s upper border to realize bullish objectives. 55.27 remains a further upside target.
However, the return of risk-off sentiment is always a possibility, especially as the coronavirus spread across the globe continues unabated. If prices breach the wedge’s lower border and break down the 50.64 support, then the wedge is invalidated, and 49.92 becomes the new target in the short term, with 47.91 lying underneath.
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