Crude oil price on the Brent benchmark extended its gains for the week with another bullish performance, as Saudi Arabia and Russia have agreed to extend cuts through to July. Sources close to the situation say that Saudi Arabia intends to push for cuts to be extended to the end of August during the OPEC + meeting which takes place on Saturday.
Iraq and Nigeria have been accused in the past of flouting production cuts, and Saturday may offer an opportunity for the alliance to call errant members to order.
Under the existing output cut arrangement, the extent of the cuts was to have been reduced to 7.7 million barrels per day from July to December 2020. The markets are hoping that a consensus can be reached on extending the 9.7 million barrels per day output cut beyond the end of June, to sustain the current price uptrend which has seen crude oil double in price from the April 30 price levels.
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Technical Outlook for Brent Crude
Crude oil price on the Brent benchmark surged beyond the $42 price level today, on the back of pervasive risk-on sentiment in the financial markets. The 5.67% upsurge on the day has enabled Brent crude to breach the 41.43 resistance area. However, crude oil price on the Brent has to register another successive candle close above 41.43 on the daily chart to confirm a break of that level. This action would open the pathway towards the next resistance level at 44.16. An agreement on the extension of the current output cuts may produce enough bullish momentum to take the asset towards the 48.33 or 50.64 resistance levels.
On the flip side, failure to reach an agreement on extending the current output cuts may produce a selloff, which has the potential of sending the asset back to the 38.56 or 35.61 support areas.
All eyes are on the OPEC + meeting for direction of crude oil prices next week.
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