Crude oil is set to open with a gap up on MCX
Crude oil is set to open with a gap up on MCX, thanks to the latest announcement by OPEC+ that they will cut production by around 1.16 million barrels per day (bpd) from May to year’s end. The weekly performance of MCX Crude oil was impressive as it rose by 8.90 percent and closed at 6199 on Friday. However, the monthly and quarterly results were less impressive as they fell by -1.59 percent in March and only gained 0.80 percent in Q1. The price movement reflects the volatility and uncertainty in the global oil market.
The announcement by OPEC+ is a surprising move, as the market had expected the cartel to maintain output levels. The cut now brings the total production cuts by OPEC+ to 3.66 million bpd, including a 2 million bpd cut in October by OPEC and a 500,000 bpd cut promised by Russia. The largest portion of the latest cut comes from Saudi Arabia, at 500,000 bpd, followed by Iraq and the United Arab Emirates. This latest reduction in production could lift oil prices by $10 per barrel, and we can expect MCX crude prices to cross the 7,000 level mark soon in April itself. Goldman Sachs (NYSE:) has also lifted its forecast for to $95 a barrel by the end of the year and $100 for 2024, signaling further optimism in the market. Despite this positive development, a US spokesperson for the National Security Council has stated that they do not think cuts are advisable at this moment given market uncertainty. Nonetheless, technically, building long positions and holding them for targets of 6700 could see prices move towards the 6850 level, as long as the prices remain above 6150 and the RSI continues to show upside momentum.
Overall, the market is showing signs of optimism and a potential rebound, given the latest production cuts by OPEC+ and the positive outlook provided by Goldman Sachs. However, market uncertainty and geopolitical tensions can still have a significant impact on the market, and investors should approach them with caution.