Crude oil price dropped and then rose today as the market reacted to news that the hyped virtual OPEC+ meeting was being postponed. The price rose after Russia’s Krill Dmitriev said that the two countries were ‘very, very, close to a deal.’
The urgent meeting was called by Saudi Arabia and Russia, who reacted to President Trump’s call for supply cuts. In a television interview last week, the president called for Saudi and Russia to slash as much as 15 million barrels of oil every day.
Saudi Arabia has said that while it supports supply cuts, all oil producers must go the extra step and cut their production. These members include the US, which is not a member of OPEC or OPEC+. Saudi was also irked by a statement by Russia, which said that the former was only interested in bankrupting American shale producers.
Surprisingly, Texan oil producers have supported supply cuts from the US. In fact, the number of rig counts in the US dropped to 562 from the previous 624 according to a number by Baker Hughes. This was the lowest number of counts since 2017.
US and Canada Talk Saudi and Russia Tariffs
Still, there is another catalyst that could push oil prices higher. Yesterday, the Financial Times reported that the US and Canada were planning to increase tariffs on Saudi Arabia and Russian oil. This would push prices slightly higher and introduce new tensions between the West and the Middle East. It would also be significant since the US imports more than 401k barrels from Saudi every day as shown below.
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Brent Crude Oil Technical Analysis
Crude oil price dropped to a low of 31.56, which was lower than the Friday’s close of 35.30. The price then rose after Russia said that the two countries were close to a deal. As of this writing, UKOIL is trading at 33.90. On the four-hour chart, volatility, as measured by the Average True Range (ATR) has risen while the 14-day and 21-day EMAs have made a bullish crossover. Therefore, I expect the catalysts mentioned above to push the price higher, between the gap showed in red below.
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