Brent Crude Oil, OPEC + News and Analysis
- OPEC’s JMMC agrees to no change in supply cut targets
- Crude oil trading sharply lower on news of the third and largest U.S. SPR release
- Brent Crude Oil: Key Technical Levels around the OPEC meeting, SPR releases
OPEC + Meeting Gets Under Way
- Joint Ministerial Monitoring Committee (JMMC) at 11:00 (GMT)
- OPEC + meeting at 11:30 (GMT)
OPEC and its allies, known collectively as OPEC +, have already begun discussions regarding the current state of the oil market and output targets for the month of May. The recent spike in oil prices has led to calls on the group to increase supply (reduce supply cuts), while OPEC insists that oil price volatility has nothing to do with organization’s policies and is instead, the result of supply fears arising out of the Russia-Ukraine conflict.
US SPR Release Round 3: Set to be The Biggest Yet
The Biden administration is considering the release of up to 180 million barrels of oil for an extended period of time to try and cool elevated oil prices. The Whitehouse said that President Biden will deliver remarks at 13:30 ET (17:30 GMT) on Thursday, which should provide more detail about the release. Thus far the 180 million barrels is anticipated to be released at a rate of 1 million barrels per day, over the next 6 months. This latest round of releases raised a fair bit of speculation that the Iran nuclear deal may have suffered more setbacks, with a potential agreement allowing a return to Iranian oil supply in jeopardy.
In addition, the International Energy Agency (IEA) members are due to meet on Friday at 12:00 (GMT) to discuss a similar release of petroleum reverves. The actual amount of the potential release has not yet been determined. The main purpose of the meeting is to confirm the total volume set for release and then determine the country specific breakdown.
Brent Crude Oil – Key Technical Analysis
Brent Crude oil and WTI both dropped around $5 after the announcement of the potential 180 million barrels release. The daily cash chart shows Brent crude at a crucial level while the OPEC meeting gets underway. The recent drop looks to have found support at 104.70 however, this level may prove to be rather fragile given oil’s propensity for massive moves as the war in eastern Europe drags on.
The 104.70 level coincides with the longer-term trendline support with the 102.60 level not far away either. A break below 102.60 would result in a simultaneous break below the long-term trendline, paving the way for a continued bearish move.
However, the JMMC meeting just concluded and reports are suggesting no change to the aggregate output target, which could see oil prices supported if ratified by the organization. Higher oil prices would see the 26.3% Fib level as initial resistance at 109.15, followed by the zone of resistance around 115.50 -118.50.
Daily Brent Crude Oil Chart (Cash)
Source: TradingView, prepared by Richard Snow
— Written by Richard Snow for DailyFX.com
Contact and follow Richard on Twitter: @RichardSnowFX
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