Brent crude oil price continues higher for the third consecutive session as the crude oil price successfully tested and rebound from the 100-day moving average. Crude oil was under selling pressure the previous week amid rising coronavirus cases and fears of a second wave of coronavirus infections.
Yesterday’s intervention by the Fed with new corporate buying programme and speculation for a new stimulus package by the U.S. government improved investors sentiment and now expect a fast global recovery. Optimism that OPEC+ production cuts would stay in place in case of a second wave of coronavirus infections also supports crude oil price.
OPEC countries and Russia agreed in April to cut crude oil production by 9.7 million barrels per day, about 10% of global production output, while renewed the agreement to extend the production cuts for one more month till the end of July.
EIA expects now that production from seven major U.S. shale formations has dropped close to two-year lows of 7.63 million barrels per day by July, as the number of oil rigs drops below 200 the previous week, the lowest since June 2009, according to Baker Hughes Co.
The Brent crude price is 1.61% higher at $40.42, marking the third consecutive day of gains after the previous week correction. Bulls took back control as the price broke above the 100-day moving average. The short term outlook is positive now as crude oil price continues to make higher highs and higher lows after the recent correction, which drove crude oil price outside the overbought area.
On the upside, Brent crude oil price resistance stands at $40.70 the daily high. If the Brent crude price breaks above $40.70, the next supply zone will be met at $41.31 the high from June 11 trading session. Next resistance stands at $43.37 the high from June 8.
On the other side, first support for Brent crude oil price is at $38.93 the daily low. Next support zone for Brent oil will be met at $37.972 the 100-day moving average. If the Brent oil price breaks lower, the next support stands at $35.02 the low from May 29.