Crude oil price action continued the bullish March towards the $40 mark on the Brent crude benchmark ahead of the online summit of the OPEC + alliance. Hopes that the crude oil producers who make up the OPEC+ alliance would agree on an extension of the hefty oil output cuts to support crude oil prices, kept the Brent crude benchmark solidly on the path towards the elusive $40 per barrel mark. As at the time of writing, a barrel of Bren crude sold for $39, notching a 1.3% gain on the day.
The online meeting to be held on June 4 would decide if the current quota cut of 9.7 million barrels per day would be extended until September 1 at the first instance. The initial plan agreed to in April and which kicked off on May 1 was that the cuts would be reduced to 7.7 million barrels from July to December 2020. However, the market response to the initial cuts has been bullish, and Saudi Arabia is pushing for the existing reduction quota to be extended.
The daily chart for crude oil price on the Brent crude benchmark shows that today’s daily candle has cleared the 38.56 resistance level. However, there needs to be an additional daily close to confirm the breakout. So tomorrow’s candle holds the key here.
A successful break of 38.56 opens the door towards the 41.43 price level (previous low of August 12 2016, with 44,16 (previous lows of November 14, 2016, and June 23 2017) making itself available as a further resistance target.
A failed break of 38.56 could initiate a price rejection and profit-taking selloff for those looking to cash in on recent price gains. This scenario allows crude oil price to retest the 35.61 support price, with 31.69 and 28.38 also in the picture as possible support targets if a price decline ensues.