Oil dips as Iran jacks up production ahead of OPEC meeting

• Oil continues losing ground after surprise comments from Iran about increasing output. 
• WTI Oil snaps below $78 and looks set to head to $75.
• The US Dollar Index ticks up with help from the Japanese Yen and market uncertainty. 

Oil prices sank more than 1.5% in Wednesday’s European session, with West Texas Intermediate (WTI) US crude prices reaching their lowest levels in almost two months. Markets are not responding well to the headline that Iran plans to add between 300,000 and 400,000 barrels per day in its production for this year, reported by Bloomberg on Wednesday. The confirmation came from Iranian Oil Minister Javad Owji on state TV, and means mayhem for the next OPEC meeting, where prolonging production cuts is the topic of discussion.

Meanwhile, the US Dollar Index (DXY) is grinding higher this week, posting gains for a third consecutive day, in joint cooperation with the USD/JPY pair, where the Japanese Yen (JPY) has already devalued half the move it gained on the Japanese interventions over the past two weeks.  The underlying bullish tone around the US Dollar (USD) might continue to weigh on Crude Oil prices

Crude Oil (WTI) trades at $77.01 and Brent Crude at $81.92 at the time of writing.

Oil news and market movers: Iran against OPEC

• The American Petroleum Institute (API) reported on Tuesday that US Crude Inventories built by 509,000 barrels the week ending on May 3. The derivatives such as Cushing, Gasoline, and Distillates all saw buildings in their segments as well, Bloomberg reports.
• The Energy Information Administration (EIA) issued a note on Wednesday saying that it sees the Oil market remaining balanced for 2024, pointing to non-OPEC countries filling in the gap of OPEC’s production cuts, Reuters reports. 
• Bloomberg Intelligence reporters Will Hares and Salih Yilmaz said in a note on Wednesday that OPEC+ (Organization of the Petroleum Exporting Countries and allies) has reason enough to prolong its production cuts, seeing the recent decline in Oil prices from $87.12 on April 5 to $77.01 on Wednesday. 

Oil Technical Analysis: Cooling down in an uptrend

Oil prices are cooling down further as the risk of interruptions in Oil production from the Middle East isn’t taking place. As traders look to be fed up with pricing in a risk premium for something that is still not happening, this sees some capitulation in the Oil price where only $75.28 looks to be only solid support level left refraining from Oil to dip to $70.00.

Still, a turnaround could occur once Oil prices recover back above $78.07, with the 100-day Simple Moving Average (SMA) and the green ascending trend line from December acting as support. Next on the upside, the 200-day SMA at $79.76 and the 55-day SMA at $81.12 are the levels to watch for some profit-taking. In the longer term, $87.12 remains the big level on the upside. 

On the downside, the pivotal level at $75.28 is the last solid line in the sand that could end this decline. If this level is unable to hold, expect to see an accelerated selloff towards $72.00 and $70.00. That would mean that all gains for 2024 are given up and Oil could test $68, the December 13 low. 

US WTI Crude Oil: Daily Chart