OPEC+'s gathering in Vienna was a tough session where members, consisting of OPEC and allies led by Russia, reached a significant decision. They unanimously agreed to prolong the existing production cuts until the conclusion of 2024.
This move comes after their initial commitment last October to reduce output by 2 million barrels per day. Surprisingly, in April, certain OPEC+ members announced an additional reduction of 1.6 million barrels per day.
Moreover, Saudi Arabia has decided to further trim its oil production by an extra 1 million barrels per day in July, with the option of extending if necessary.
Last month, Saudi Energy Minister Abdulaziz bin Salman cautioned short sellers. He emphasised that they would be "ouching" as they did in early April when the unexpected production cuts led to a spike in crude prices.
The cuts have supported FXCM's UKOil CFD. Its daily candlesticks have moved into their bullish zone, between the upper blue and red bands. The RSI has punched above 50 (green square), denoting an underlying bullish momentum. The longer it can maintain this position, the greater the support for prices.
Oil is well off its 2022 highs amid worries of a global economic slowdown. The current cuts are likely to be short-term in nature, with the longer-term position dependent on macroeconomics and if the Saudi cut extends beyond July.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.