Coronavirus: OPEC Plans Output Cuts to Shore Up Crude Oil Price
Crude oil price on the Brent and WTI varieties were slightly higher on the day as a Reuters report indicates that the Organization of the Petroleum Exporting Countries (OPEC) is planning to cut production by an additional 500,000 barrels per day as the coronavirus outbreak continues to pressurize prices,
According to the Reuters report on Monday which cited two sources close to the situation, a meeting is being planned for February 14-15 to discuss a deepening of the cuts, as fears of reduced demand due to the coronavirus outbreak stifle prices.
However, the upside on today’s uptick of prices looks capped as Iranian Oil Minister Bijan Zangeneh has indicated that his country does not intend to participate as a result of sanctions. However, he said that Iran could agree to an earlier meeting if members would be open to further production cuts.
Reuters had earlier reported on a planned meeting between the OPEC and non-OPEC Joint Technical Committee (JTC), scheduled to hold on Tuesday and Wednesday to review the coronavirus impact on the crude markets.
Crude oil price on the Brent crude is currently at 56.47, having touched off intraday lows at the 55.46 support level. This action leaves crude oil price with some bullish momentum for the day, which will have to rely on positive outcomes from the proposed OPEC+ meeting to be sustained. The initial target for upside movement is at the 2 September and 3 October 2019 lows at 57.47 (now acting as resistance in a role reversal from last week’s support break). A breach of this level to the upside targets 58.69 or possibly 60.26 if bullish recovery is active.
However, further weakening of the asset sees crude oil price, setting its sights towards 55.59 and 53.26, in that order.