WTI crude oil price initially rallied to an intraday high of 28.17 following a deal among oil-producing countries to reduce supply. However, the commodity quickly gave up its gains as market participants quickly realized that production cuts may not be enough to sustain crude oil price. As of this writing, the commodity has tapped new lows for April at 22.41.
According to reports, OPEC member countries along with Russia and the US have agreed to cut oil production by 10 million barrels per day in May and June. It has been said that Saudi Arabia and Russia, who were at an oil price war in March, agreed to cut their production by 8.5 million barrels per day. However, it is still unclear what the quota is for the other countries. There are speculations that other countries would reduce 23% of their current output.
Despite the initial reaction of the market, there is still hope that these upcoming production cuts could provide crude oil price its much-needed support. The coronavirus pandemic has significantly dampened demand for oil. And so, perhaps it will be enough to force oil-producing countries to cooperate with each other. A strong commitment from them to limit the supply of crude oil could be the spark that crude oil price needs to rally from its current price.
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WTI Crude Oil Price Outlook
On the 4-hour time frame, it can be seen that WTI crude oil price CFDs is testing support at the rising trendline (from connecting the lows of March 30 and April 1). The current price where it is currently trading also coincides with the 100 SMA. If there are enough buyers in the market for support to hold at the 23.00 handle, we could see a potential inverse head and shoulders pattern. This is widely considered as a bullish reversal indicator. We could then expect the commodity to rally to its neckline resistance around 28.30. A bullish break of this price could mean that WTI crude oil price may be on its way to its March 11 highs at the 36.00 handle.
On the other hand, watch out for a break below the trend line support. It could mean that crude oil price may be headed lower. Near-term support would be at 18.97 where the commodity bottomed on March 30.
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