According to the analysis of the previous week, the Brent Crude oil price remained above the level of $77.
As you see in the oil chart, the current oil price is at the lower end of the channel, ranging around $79, and the RSI has reached the oversold range. Our prediction is that the price will rise from $77. However, if the price drops below this level, it may go as low as $71.5.
OPEC+ agreed to deepen the current production cuts of 1.3 million bpd by some 900,000 bpd, taking the total to over 2 million bpd. This left traders cold as earlier reports suggested additional cuts of up to 2 million bpd. The cuts will take effect during the first quarter of 2024.
UBS’ Giovanni Staunovo noted that the additional cuts may remain on paper only: “It seems the OPEC+ production cuts are ‘voluntary’ cuts, not part of an OPEC+ agreement. Hence the concern is that a large fraction of it could be a pledge on paper and effectively less barrels being removed from the market.”
Goldman Sachs called the additional cuts “a temporary response to inventory builds and production growth, noting also the increase in production capacity. The bank’s analysts also noted the fact that the additional cuts are voluntary, meaning that any further output reductions would be even more challenging to agree on, as reported by Bloomberg.