Oil continues to selloff after posting the monthly high last week of around $83.53 as a relatively stronger dollar and global demand concerns weigh on the energy commodity.
After briefly breaching the zone of resistance and reversing at the 200 simple moving average (SMA), WTI now attempts to fill the price gap created by OPEC’s surprise output cut at the end of April which is said to remove 1.16 million barrels per day (mbpd) of production. See the chart below for the breakdown of the cuts per OPEC member nation.
Immediate support appears via the long-term level of significance at $77.40 with the 50 SMA appearing not too far from there. Now that oil prices have attempted to bridge the gap, a further decline towards $75.75 would achieve that goal. Since the output cuts are only expected to come into effect at the beginning of May, there is capacity for a bearish continuation but considering the increasingly tight oil market, lower prices aren’t expected to remain in the longer-term. Resistance appears back at the hugely influential $82.50 zone and the 200 SMA.