Oil prices staged large-percentage rebounds again. U.S. WTI crude oil futures jumped 20.0% to $16.50 a barrel, and Brent crude oil futures rose 4.7% to $21.33 a barrel. Recently recognized OPEC+ agreement to cut production by 9.7 million barrels per day is ready to come into power on May 1, OPEC’s fourth-largest producer, as Kuwait has already started to cut the supply to the market. As per Kuwait’s Oil Minister Khaled Al-Fadhel, Our country has ducked production while recognizing our responsibility through a hard time.
However, most of the experts saying that these OPEC+ output cuts will not be sufficient to tackle market conditions produced by coronavirus-led demand destruction and the rise in inventory levels. But there is the expectation that the output cuts may stop its sharp declines and put a floor under the prices.
The best way to boost the oil prices is the recovery in demand, and it is only possible when lockdowns are scrapped and industrial activity start or a generous and unprecedented production cut, in addition to what OPEC+ decided.
At the U.S. front, U.S. senators passed a nearly $500 billion bill for relief from the pandemic, providing support to small businesses and hospitals. The package raises U.S. spending on the crisis to nearly $3 trillion.
Moving on, the demand disruption caused by the coronavirus is set to become the most precipitous fall in global GDP since the Second World War, as per the forecasting a 5.5% reduction in global economies this year, dwarfing the 0.5% fall seen during the global financial crisis in 2008.
Daily Support and Resistance
- S1 2.33
- S2 8.26
- S3 11.59
Pivot Point 14.2
- R1 17.53
- R2 20.14
- R3 26.08
The crude oil recovered after dropping to $7.50 previously. For now, the prices are holding around 16.85 level, right below the next resistance level of 17.55, which marks the 61.8% Fibonacci retracement. Bullish crossover of 17.55 level can extend bullish trend until 20.75 level. On the lower side, immediate support holds around 14.70 level today. Bullish bias will be stronger above 17.55 and bearish below the same.