Crude oil price edged up during the Asian session after a report about Chevron job cuts. The price of Brent rose from yesterday’s low of $33.58 to the current $34.23 while West Texas Intermediate (WTI) rose from $31.30 to $31.97.
Chevron is one of the most respected oil producers in the United States. Investors love it for its strong financial discipline that other oil companies lack. For example, it was among the first producers to slash jobs when the price of crude oil started to drop. Also, it made about $1 billion when it abandoned the takeover of Anadarko. The company was then acquired by Occidental, in one of the worst-timed mergers of our time.
Early this year, Chevron announced that it would slash about 30% of its budget this year. It also announced several voluntary job cuts. Therefore, the current job cuts means that it will shed about 6,000 employees.
While this is definitely bad news for the employees, it is good news to oil prices, which have dropped by more than 30% this year. That is because it will reduce the amount of oil it produces. Also, the fact that Chevron can make these cuts means that other companies will do the same.
Price of crude oil awaits official inventories data
The price of crude oil dropped yesterday after a report by the American Petroleum Institute (API) showed that inventories in the US rose for the first time in two weeks. Inventories rose by more than 8.7 million barrels. Investors will now wait for a confirmation from the EIA, which will release the data today. Analysts expect the data from EIA to show that inventories declined by more than 1.9 million in the previous week. In the past, data from the API and EIA have differed by a significant margin.
Meanwhile, investors are also reacting to news that Vladmir Putin and Mohammed bin Salman have committed to continue supply cuts ahead of the upcoming meeting in June 9.
Crude oil price has rallied significantly in the past few days and is now closer to its 11-week high. On the daily chart, the price has found significant resistance on the 38.2% Fibonacci Retracement level at about $37.36. The price is also attempting to move below the 50-day exponential moving average. Therefore, there is a possibility that bears will come back and attempt to retest the psychological level of $30, which is also slightly above the 23.6% retracement level.
On the flip side, a move above the double top at $37.36 will mean that there are still buyers in the market, who will be interested in pushing the price higher.