WTI oil opened with 2.6% gap higher on Monday, lifted by decision of Saudi Arabia to reduce production to 9 million barrels per day in July from 10 million in May, the biggest reduction in years.
The Saudi Arabia’s cut comes on top of OPEC+ agreement to limit oil supply in 2024, aiming to boost prices, in a broader attempt to stabilize oil market, hurt by persisting concerns about global economy weakness and impact on oil demand.
Monday’s jump broke through Fibo resistance at $73.57 (50% retracement of $83.51/$63.63) but faced strong headwinds from the base of daily cloud ($73.99).
Extension of strong bounce last Thu/Fri requires clear break of $73.57 and penetration of daily cloud to signal continuation and expose targets at$74.70 (May 24 high) and $75.58/92 (100DMA / Fibo 61.8%).
Rising bullish momentum on daily chart and MA’s (10,20,30) in bullish setup support the action, with bulls to stay intact while today’s gap remains unfilled.
Dips should remain contained by 30DMA ($72.22) to keep bullish bias, while dip and close below converged 10/20DMA’s ($71.76) would weaken near-term structure.
Res: 73.57; 73.99; 74.70; 75.58.
Sup: 72.22; 71.76; 71.22; 70.86.