Crude oil prices rose today as the market remained optimistic about the biggest oil deal ever. The deal could be announced at a virtual meeting between OPEC and other non-OPEC members. According to Reuters, the deal will see members commit to slash about 10 million barrels of oil per day. This meeting is expected to be more successful than the previous one that led to the current crisis.
Media reports suggest that Russia has committed to slash its daily production by more than 1.6 million barrels. Saudi Arabia, which wants oil prices higher could also commit to more cuts. Meanwhile, while the US is not a member of OPEC, the country has been slashing its production.
On Friday, data from Baker Hughes showed that the country’s producers closed 62 rigs in the previous week. The number of rigs in operation has declined from more than 800 in November last year to the current 562. This means that the country has reduced oil production by more than a million barrels per day. The same trend has happened in Canada and Norway.
An oil deal will be positive for the price of crude oil in the short term. Still, the biggest concern will be about whether demand will start to peak up. There are positive signs from Europe where countries like Austria have started easing movement. Other countries like Belgium, Italy, and Spain are also considering this. The challenge is whether these actions will bring demand, which is at historic lows.
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Crude price technical analysis
Brent crude rose to an intraday high of 34.05 on hopes of a deal. On the 30-minute chart, the price has been moving in a sideways pattern. It has struggled to move below 31.56 and above 34.72. As a result, the volatility has been minimal. In most times, this calmness happens before major volatility happens. In other words, it is usually a calm before the storm situation. Therefore, I expect the price of oil to break out in either direction. The key levels to watch will be $35 and $30.
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