Crude oil price has begun the new week on its front foot following Saudi Arabia’s pledge to deepen its output cut. Seeing that this is the largest decline in years by the world’s leading exporter of crude oil, the commodity may record further gains in the ensuing sessions. Even so, with the macroeconomic headwinds, the rallying may not be aggressive in the short term.
The latest driver of crude oil price is Saudi Arabia’s plan to make a deep cut to its oil output in July. This is in addition to the decision by the broader OPEC+ to extend its production cuts into 2024. On Sunday, Saudi Arabia’s energy ministry indicated that the output will drop to 9 million bpd in the coming month; down from 10 million bpd in May. Indeed, this is the country’s largest reduction in years.
Saudi Arabia is the leading exporter of crude oil in the world. As such, its pledge is set to impact the commodity’s supply in the year’s third quarter. In fact, bulls are largely of the opinion that $70 will now become a steady floor for Brent crude oil price as they strive to boost the rebound to $100 per barrel.
Brent crude oil price prediction
Brent futures rose by over one dollar in early Monday trading; hitting its highest level in a month at an intraday high of 78.66. As at the time of writing, it had pulled back to 77.85.
A look at its daily chart shows the asset trading above the 25-day EMA while hovering around the 50-day EMA. For as long as crude oil price remains below the psychologically crucial zone of 80, the bears are still in control.
In particular, the range between 73.55 and 78.66 is worth watching. On the upside, talks over output cuts may attract additional buyers. If that happens, 80.17 will be the next target for the bulls.