Crude Oil Price Update – Uptrend Reaffirmed as OPEC+ News Triggers Short-Covering Rally

U.S. West Texas Intermediate crude oil futures jumped on Thursday after OPEC+ said the cartel and its allies would keep production largely steady through April. Saudi Arabia also said it would extend its one million barrels per day voluntary production cut into April. The news crushed short-sellers who had bet on at least a 500,000 barrel per day rise in the previously established production cuts.

At 21:48 GMT, April WTI crude oil is trading $63.93, up $2.65 or +4.32%.

The group approved the continuation of current production levels for April, except that Russia and Kazakhstan will be allowed to increase production by 130,000 and 20,000 barrels per day, respectively.

The news caught many investors by surprise, which likely contributed to the exaggerated reaction to the story. Going into the OPEC+ meeting, energy analysts told CNBC earlier this week that they had expected OPEC+ to discuss allowing as much as 1.3 million barrels per day back into the market for April and perhaps beyond. Their assessment may have been based on dovish comments from Non-OPEC leader Russia earlier in the week.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out the previous main top at $63.81. The new main bottom is $59.24. Taking out this level will change the main trend to down.

In another sign of strength, buyers also took out the October 22, 2018 main top at $64.26.

The nearest support zone moved up to $58.20 to $56.62.

Short-Term Outlook

Thursday’s move was news related and may have been a little exaggerated. The gain from low to high was impressive, but the market moved only $1.05 above last week’s top at $63.81.

A sustained move over $64.26 will indicate the buying is getting stronger and that the rally is not being fueled by only short-covering. If the move continues over the near-term then we could see an eventual test of the October 1, 2018 main top at $67.23.