Crude oil prices witnessed a speculative jump yesterday. Prices jumped by 6.66%. Headed for its biggest daily rise in nearly a year after OPEC+ jolted markets with plans to cut more production.
Oil prices rose abruptly after OPEC+ plans to cut more production jolted markets the previous day. With investors’ attention shifting to demand trends and the impact of higher prices on the global economy.
Brent crude was up 7.03%, at $79.73 a barrel after touching its highest since March 7 at $79.89. West Texas Intermediate crude U.S. was up 9.32%, at $75.65 a barrel, after hitting its highest since late January. MCX Crude jumped towards 6655, the highest levels since late March.
The Organization of the Petroleum Exporting Countries and allies including Russia. A group collectively known as OPEC+, shook markets with Sunday’s announcement. That it is cutting its production target by a further 1.16 million barrels per day (bpd).
The group had been expected at its monthly meeting to stick with its previous decision to target output cuts of 2 million bpd until December.
The latest pledges bring the total volume of cuts by OPEC+ to 3.66 million bpd, according to Reuter’s calculations, equating to 3.7% of global demand.
Now, ‘ attention is shifting to demand trends and the impact of higher prices on the global economy.
A higher crude price is increasing worries about higher costs for businesses and consumers. Raising fears an inflationary jolt to the world economy from rising oil will result in more rate hikes.
Market watchers have been trying to gauge how much longer the U.S. Fed may need to keep raising interest rates to cool inflation, and whether the U.S. economy may be headed for recession.
U.S. manufacturing activity slumped to the lowest level in nearly three years in March. And could decline further on tighter credit and higher borrowing costs.
Technical View – 6785 will act as a decisive resistance
Crude oil had a speculative jump yesterday. It gained more than 6%. It was the biggest single day gain in a year . Prices rose sharply from the low of 6220 and jumped towards 6655, the highest levels since13 February 2023 and settled at 6612.
Intraday price action resulted in formation of long bullish candlestick which is yet indicating bullish momentum in near future. However, prices face the resistance of 100 SMA on the daily chart which also coincided with previous swing high.
Today, a fresh upside move could be expected above 6670. Target would be 6760.
Further, 6788 will be an important hurdle on the upside, coinciding with multi week high. If it break and sustain then will open the door for 6950-7050.00
Alternatively, failure of the break will create a probability for correction. And crude oil prices may retreat towards 6450-6300 in near future.