OPEC cuts production, oil prices soar

April began with strong increases in oil prices on global markets. On Monday morning, Brent crude on the Tickmill platform shot up 4,76 percent. to USD 84 per barrel, hitting the level of USD 85,33 today.

On Monday morning, crude oil rose sharply after the decision of the states OPEC + about mining cuts. On Sunday, Saudi Arabia and other countries belonging to the OPEC cartel decided to reduce oil production starting from May this year. until the end of 2023. According to Saudi Arabia, the decision taken on Sunday is to ensure the stability of the oil market.

Saudi Arabia declared voluntary reducing its oil production by 500 tons barrels per day, Iraq by over 200 barrels, United Arab Emirates by 144 thousand. barrels, and Kuwait by 128 thousand. For other countries, the reduction does not exceed 100. barrels.

Simultaneously with the announcement of the decision by the OPEC countries, Russia extended until the end of the year the validity of its March decision to reduce oil production by 500 tons. barrels per day.

Brent crude, daily chart. Source: Tickmill

Monday's jump in Brent crude prices is not only pushed its prices up to levels not seen in almost a month, but above all, it brought a huge gap in the bull market at the beginning of the week and led to breaking above the almost 10-month downtrend line, which can be followed by the local highs of June 2022 and the beginning of March this year. If you add to this the earlier return of the daily Brent chart above the lows of December ($75,56) and February ($79,10), as well as the improvement of the situation on the basic indicators, the way to further gains has been opened. And these chances for an upside are not reduced even by today's pullback from above $85, where resistance forms the upper limit of the 4-month descending channel (currently at $85,45).

Therefore, until oil prices close today's bullish gap, i.e. they do not return below Friday's closing at $ 80,18, one should count first with an attack on the strong supply zone of $88,99-89,24, and ultimately with increases towards the over-year bearish line, which is currently at just below $97, and in about a month, when such an attack could take place, it will form resistance around $93.