WTI oil keeps firm tone on prospect of tighter supply after the biggest world oil exporters Saudi Arabia and Russia decided to further cut production, earlier this week.
Two top OPEC+ members extend cartel’s campaign in reducing oil output, which started last November, arguing the latest decision by continuous action in doing whatever necessary to support market.
On the other hand, the United States criticized decision, as the biggest oil producer outside the cartel calls for increasing production to help global economy and also upset by strengthening cooperation between two countries, in light of a conflict in Ukraine, in which Russia and the Western World are on opposite sides.
Analysts expect that additional production cuts should balance the energy market, threatened by slower than expected economic growth of China, world’s largest oil importer, as the economy is struggling to accelerate recovery in post-Covid period.
Oil price rose in past few sessions and pressuring the top of near-term range ($72.68), break of which is needed to signal an end of directionless phase and confirm formation of higher base at $67.00 zone.
Violation of $72.68 pivot would open way for further recovery and expose targets at $73.60 (50% retracement of $83.51/$63.63 fall / 100DMA / daily cloud top) and $74.70 (May 24 high) in extension.
Near-term action needs to hold above $71.22 (broken Fibo 38.2%) to keep bullish bias, while break here and extension below daily cloud base ($70.56) would weaken near-term structure and warn of extended range trading.
Fading bullish momentum and overbought stochastic on daily chart, counter for now bullish setup of MA’s (10/20/30).
Res: 72.14; 72.68; 73.60; 74.33.
Sup: 71.22; 70.56; 70.00; 69.58.