Crude oil price rose significantly on Monday on the back of the surprise announcement by OPEC+ WTI futures, the benchmark for US oil surged by about 8% to an intraday high of $81.43. As the macroeconomics continue to weigh on the financial markets, OPEC+ appears keen to boost oil prices by staying ahead of the market curve.
OPEC+ production cut
The crude oil price gains recorded on Monday are largely due to the surprise output cuts announced by OPEC+ on Sunday. The alliance which includes nations like Russia decided to decrease production by about 1.16 million bpd. This came as a surprise to analysts and investors alike as they had expected the organization to maintain their prior decision to cut output by 2 million bpd till December 2023.
The move has brought the total cuts by OPEC+ to 3.66 million bpd, which equates to about 3.7% of the global oil demand. Indeed, it appears that the group is keen on being pro-active and remaining ahead of the market curve.
As the banking crisis stabilizes, crude oil price has been on a rebound for about two weeks now. However, seeing that demand concerns are still on, OPEC+ appears set to grab the asset from the tentacles of the bearish market sentiment.
Brent crude oil price prediction
Crude oil price began the new week on its front foot as the market reacted to the surprise move by OPEC+. By 08:09 am GMT, Brent futures were up by 5.74% at $84.32.
The benchmark for global oil ended the past week at an intraday high of 79.85. Following the extended gains, the asset is now trading above the 25 and 50-day EMAs as shown on its daily chart.
In the short term, 85.35 will be a resistance level worth watching as the bulls strive to gather enough momentum to boost crude oil price further. Past that level, the next target will be at 88.86; a zone last hit at the start of December 2022. This bullish thesis will remain valid for as long as the commodity continues to trade above the support zone of 79.85.