Oil has lost 1.7% since the start of the day on Tuesday, in addition to a more than 3% drop the day before, clearly showing the market’s reaction to the OPEC+ meeting over the weekend.
“The technical picture in oil has turned very bearish,” said Alex Kuptsikevich, FxPro senior market analyst. “OPEC+ agreed to an impressive extension of low production quotas, but markets are paying more attention to the short-term supply-demand balance and viewed the move as underwhelming.”
“In the middle of last week, WTI crude bounced off resistance in the form of the 200-day moving average and moved closer towards the lower end of the May trading range. Oil is also trading below its 50-day average, which is pointing downwards. All of this is evidence of an intensifying bearish medium and long-term trend.
“Earlier, we also pointed out that the cartel, especially Saudi Arabia and Russia, is becoming hawkish, preferring to give active signals or cut production when the price gets close to the 200-week average. This curve reflects ultra-long-term trends, averaging the price over almost four years. Oil has been receiving impressive support after touching this line in 2019 and 2023. Since the beginning of this year, there have been new attempts to break below, which have so far resulted in strong upside momentum.”