The price of oil approaches the 2019 high ($66.60) following the OPEC meeting as Saudi Arabia stays on track to reduce supply by 1 million b/d until April, and current market conditions may keep crude prices afloat as US output remains at its lowest level since 2018.
It seems as though OPEC and its allies are in no rush to switch gears as the group emphasizes “the ongoing positive contributions of the Declaration of Cooperation in supporting a rebalancing of the global oil market,” and it remains to be seen if OPEC+ will change its tone over the coming months as group.
As a result, the price of oil may continue to exhibit a bullish behavior ahead of the next OPEC meeting starting on March 31 as OPEC and its allies pledge to “remain vigilant and flexible given the uncertain market conditions.” At the same time, fresh data prints coming out of the US may keep oil prices afloat even though crude inventories rise the most since 1982 as production remains below pre-pandemic levels.
The most recent update from the US Energy Information Administration (EIA) showed weekly field production of crude recovering from the weather-related slowdown, with output climbing to 10,000K from 9,700 in the week ending February 19 to market the rise in three weeks.
With that said, oil prices may continue to track the ascending channel established in November as crude output remains subdued, and the price of oil appears to be on track to test the 2019 high ($66.60) as it extends the series of higher highs and lows from the monthly low ($59.24).
At the same time, recent developments in the Relative Strength Index (RSI) indicate that the bullish momentum could gather pace as it pushes back above 70, and the extreme reading in the oscillator is likely to be accompanied by higher oil prices like the behavior seen earlier this year.
Crude has broken out of the range bound price action carried over from the end of January to extend the upward trend established in November, but the Relative Strength Index (RSI) failed to keep up as a break of trendline support emerged ahead of February, with a textbook sell signal taking shape ahead of March as the indicator slipped below 70.
Nevertheless, the RSI appears to be on track to threaten the downward trend established in February as it push back into overbought territory, and the extreme reading in the oscillator is likely to be accompanied by higher oil prices like the behavior seen earlier this year.
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