The expectations that OPEC + could approve a slight increase in production quota for its members are driving the bearish sentiment and pessimistic Brent Crude oil price predictions this Tuesday. Brent crude was down 0.73%, following two days of a price slump of more than 7%.
RBC Capital Markets says it expects the OPEC+ alliance to agree to raise production after its 2020 production cut cycle ends this August. RBC expects the production hike to be anchored on Saudi Arabia and other members of the Gulf Cooperation Council.
Crude oil prices remained high between February and June 2022, peaking at 125.14 on 14 June after the 138.03 top of 7 March. However, prices have been sliding since then as many OPEC + members failed to meet their quota. OPEC + members Nigeria and Libya have been implicated in producing only 30-60% of their allocated quota in 2022.
Further adding to bearish Brent crude oil price predictions are global crude oil demand concerns, following recent PMI data that show a contraction of business activity in the manufacturing sectors in China, the US, UK, and the Eurozone. In addition, good earnings for oil-producing companies on the back of higher energy prices could also allow for increased production by these majors without an accompanying match in demand, further dampening prices.
Tuesday’s decline looks set to confirm the breakdown of the 100.92 psychological price mark/26 April low. This move sets up the 97.40 support (16 March low) and the 91.32 pivot (16 February 2022 low) as the primary harvest points for the bears in the short term. Only if the price action decline below this level will the prior low of 25 January 2022 at 86.72 and the 80.22 support level (6 January 2022 low) become additional southbound targets for the bears.
On the flip side, a return to bullish ways has to follow a break of the 106.11 resistance (19 May low and 12 July high) and the descending trendline to force a move toward the 114.03 resistance target (5 May and 4 July 2022 highs). Yet, a potential pitstop remains at 109.58, formed by the previous highs of 5/21 April 2022.
Above these levels, a further advance targets the 120.00 psychological resistance, which also houses the 3 March and 29 June highs. Finally, 124.47 (10 June high) and 131.86 (9 March peak) are additional harvest points for the dwindling pool of bullish traders.
This post was last modified on %s = human-readable time difference 12:27