Brent crude oil prices inched up on Friday, with the market reacting to news of extension of production cuts by OPEC and declining US stockpiles. The commodity traded at $82.52 per barrel, having gained 0.79 percent at 1300 UTC. The gains put an end to a two-day losing streak, with oil currently up by 0.30 percent this week. However, the commodity will almost certainly close the month in the red, with the current price slightly reducing its losses in May to 4.18 percent.
The OPEC+ cartel will meet on Sunday to decide on the next course of action for the current 5.86 million barrels per day cut. However, based on the current oil prices, it is widely expected to extend 2.2 million barrels per day voluntary cuts to the end of 2024. Furthermore, there’s a possibility that they could announce the extension of at least a fraction of the current obligatory 3.66 million bpd cuts to 2025. With China’s economy showing muscle to potentially grow faster than expected in 2024, such cuts could propel oil prices higher in the second half of the year on positive demand outlook.
Elsewhere, the United States reported a forecast-beating decline in crude oil inventories for the week ending May 24. According to the Energy Information Administration, the amount of crude oil held by US oil producers declined by 4.156 million, exceeding the forecast figure of -1.60 million barrels. This is supportive of strong demand outlook for the commodity, and will continue providing upside propulsion heading into the weekend.
Technical analysis
Brent crude oil price pivots at 81.82, and the upward momentum will likely continue if the buyers keep the price above that mark. The momentum will likely meet the first resistance at 82.34, but extended control by the buyers could breach the resistance and build the momentum to test 82.77. However, if the price goes below the pivot mark, the momentum will favour the sellers to take control. Furthermore, the first support at 81.45 could be broken, thus invaliding the upside narrative. Also, that could propel further losses to test 81.00.
