Oil gains remain capped by key resistance levels as OPEC+ kicks the can down the road
No OPEC+ decision on production cuts extension until June
Hopeful optimism and greater drawdowns in inventories have helped to keep oil prices underpinned so far this year, but is the upside momentum starting to wear out? Traders were expecting some added support from the OPEC+ decision next month but now that gets postponed to June instead.
That is leaving a lot to be desired for a further run to the upside in oil prices. WTI is running into key resistance levels with the 50.0 retracement level @ $59.63 and the $60.00 handle likely to limit any upside breakout for the time being.
It's hard to imagine traders front-running the OPEC+ decision with a significant break above $60.00 with more than two months of uncertainty still to play out. If anything, I reckon the 200-day MA (blue line) will be the area where profits will be taken and price starts to run lower again; should it even break above the $60.00 barrier in the first place.
Otherwise, the postponement of the OPEC+ decision is likely to leave oil prices in limbo much like what we saw in late February to mid-March. Downside support is seen around the $55.55 level and the 100-day MA (red line). A break of the latter will be more significant as it would allow sellers to regain back control.
But with sentiment still leaning towards production cuts being extended, oil prices can still rely on OPEC+ to keep its upside momentum intact, for now at least.