Crude Oil Price Update – Gains Capped after OPEC+ Lifts Production Targets Slightly More than Planned

U.S. West Texas Intermediate crude oil futures are edging lower on Friday after OPEC and its allies voted to raise production targets slightly more than planned. Nonetheless, the market remains underpinned by tight global supply and rising demand due to China’s easing of COVID restrictions.

Today’s relatively calm trade is a stark contrast to Thursday’s volatile session that saw prices soar more than 1% following early weakness after U.S. crude inventories fell more than expected amid high demand for fuel. Yesterday’s rally took place despite OPEC+’s agreement to boost crude output to compensate for a drop in Russian production.

At 11:41 GMT, July WTI crude oil is trading $116.49, down $0.38 or -0.33%. On Thursday, the United States Oil Fund ETF (USO) settled at $87.27, up $1.73 or +2.02%.

The U.S. benchmark is on track for a sixth weekly gain on tight U.S. supply, which has prompted talk of fuel export curbs or a windfall tax on oil and gas producers.

Still, expectations that supply will stay tight limited losses. OPEC+ divided the hike across its members and still included Russia, whose output is falling due to sanctions and some buyers avoiding its oil over the invasion of Ukraine, suggesting the boost will undershoot.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower. A trade through $119.98 will signal a resumption of the uptrend. A move through $103.24 will change the main trend to down.

The minor trend is also up. A trade through $108.61 will change the minor trend to down. This will confirm the shift in momentum.

On the downside, the nearest support is a series of minor pivots at $115.59, $114.30 and $111.61. The latter is a potential trigger point for an acceleration to the downside with key 50% level at $104.26 the next target.

Daily Swing Chart Technical Forecast

Trader reaction to the first pivot at $115.59 is likely to determine the direction of the July WTI futures contract on Friday.

Bullish Scenario

A sustained move over $115.59 will indicate the presence of buyers. Taking out $117.87 will indicate the buying is getting stronger. This could trigger an acceleration into the minor top at $119.98, followed by the March 7 main top at $121.17.

Bearish Scenario

A sustained move under $115.59 will signal the presence of sellers. This could trigger a quick break into $114.30. If this level fails as support then look for the selling to possibly extend into $111.61, followed by $111.20.

If $111.20 is taken out with strong selling volume, we could see a near-term break into $104.26.