Oil risks sliding below $70 as OPEC+ production cuts prove insufficient

• WTI Oil trades near $74 in the aftermath of the OPEC+ meeting last week.
• The US Dollar rallies as the rate differential between the US and other countries widens.
• Oil could sink lower as supply increases once the US has restocked its Strategic Reserves (SPDR).

Oil prices are trading at a standstill near $74 in the aftermath of a disappointing OPEC+ outcome. The split division within the group of Oil producers was significant,  and the result was not what markets wanted to see in order to send Oil prices higher. Adding to that, the US is shoring up its Oil supply and buildup of its strategic stockpile, which means that once full even more oversupply will hit markets. 

Meanwhile, the US Dollar (USD) is rallying firmly for a second day in a row after China received a negative outlook from rating agency Moody’s and European Central Bank (ECB) board member Isabel Schnabel mentioned that inflation is near target and the ECB is at the end of its hiking cycle. This makes markets backtrack on the idea the US Federal Reserve would be the first to cut interest rates, supporting US yields and placing the US Dollar at higher value than the Euro and other currencies. 

Crude Oil (WTI) trades at $74.02 per barrel and Brent Oil trades at $78.77 per barrel at the time of writing. 

Oil news and market movers: OPEC+ lost the game for now

• Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ Oil production cuts can “absolutely” stay in place until March and beyond if needed, Bloomberg reported.
• On the back of the comments from the Saudi Energy Minister, no real moves in Crude or Brent prices to take notice. 
• Some strange moves in South Korea, where two processors bought 4 million barrels of US Oil up to now, for delivery in March, according to two traders who wanted to stay anonymous. 
• This evening, the American Petroleum Institute (API) is due to release its weekly stockpile changes. The previous week recorded a small drawdown of 0.817 million barrels, with no forecast pencilled in for this week’s numbers. 

Oil Technical Analysis: OPEC trying to catch the ball 

Oil prices have been actually quite steady in the days after the OPEC+ official announcement. OPEC+ participants are starting to realise the missed opportunity and are trying to still salvage the situation with side comments such as those from the Saudi Energy Minister. These elements can be good for short blips, but they are unlikely to lead to substantial rallies or to  install a price floor on Oil prices. 

On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump above that again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.

On the downside, the soft floor near $74.00 is under pressure. This level is acting as the last line of defence before entering $70.00 and lower. Watch out for $67.00 with that triple bottom from June as the next support level to trade at. 

US WTI Crude Oil: Daily Chart