Crude oil prices trade slightly lower today as markets digest the 0.5mbpd cut agreement in OPEC meeting in Vienna. These oil production cuts come after the 1.2mbpd cut agreed back in December 2018. Saudi Arabia said that it might continue with additional voluntary cuts, resulting approximately in about 2.1mbpd cuts in total. OPEC countries will cut about 1.59mbpd while the non-OPEC countries will offer 0.51mbpd cut. The production cuts have driven the crude oil price higher during December.
On the oil supply side there are some concerns if all countries will comply, in past Nigeria, Oman and Russia failed to achieve a 100% compliance. On the demand side we have some downward revisions on global growth and oil demand.
IEA estimates global growth now to 2.9% from 3.2% in 2019 while for 2020 expects a 3% growth down from the previous forecast of 3.4%. OPEC for 2020 estimates crude oil demand growth of 1.1mbpd and the global economic growth to 3%. U.S. oil production has touched all an all-time high at 12.9 million barrels per day.
The Crude oil price gives up 0.08% at $58.97 as the price retreat from the three-month high that hit last week boosted by the cuts in oil production. The crude oil technical outlook is bullish for the short term as the oil price trades above all major daily moving averages and holds inside the upward channel that started in early October.
On the downside, immediate resistance for crude oil price stands at $58.82 today’s low, while the next support will be met at $57.53 the 200-day moving. A daily settlement of the oil price below the $57.53 might result in a deeper correction down to $55.91 the 100-day moving average.
On the upside, crude oil prices face the first resistance at $59.02 the daily top. If bulls clear that intraday resistance level, the next hurdle will be met at 59.82 the high from December 6th. In case the crude oil price manages to break above that level will refuel the positive momentum and will attempt to reach the $60.00 psychological mark.