Outlook for crude oil: EU imposes $60 price cap on Russian oil; OPEC+ remains intact

Market Analytics and Technical Considerations

Key Points

The G7 has set the price of a barrel at $60 this coming Monday.

OPEC+ chooses not to change its output goals.

The fundamental background of Brent crude oil

After OPEC+ convened and decided that production will remain at current levels of output, Brent crude oil prices have already experienced some considerable Monday price movement. The resolution was made in the context of other important developments, such as China’s relaxation of COVID limits and the EU’s price ceiling on Russian oil. G7 nations agreed on a price of $60 per barrel for Russian oil that is transported by sea, and those who want to buy more than this amount may do so without using Western assistance like reinsurance and transportation.

Russia responded by saying that it would not obey the minimum price, which may raise questions about future supplies and drive up the price of crude oil globally.

According to the data, retail traders are NET LONG on crude oil, with 73% of dealers holding long positions at the moment. Normally, we take the opposite stance from the majority of people, but recent shifts in long and short positions have led us to adopt a short-term cautious inclination.

The CFTC data above shows yet another fall in long positions for Brent crude oil, but the possibility of Russian supply restrictions has kept crude oil prices high. The dollar is trading slightly softer this week as attention turns to the United States’ ISM services PMI numbers, despite last week’s higher than anticipated Non-Farm Payrolls (NFP) data (see economic calendar below). Since the U.S. economy is more dependent on the services sector, statistics in that sector are given greater weight than figures in the industrial sector.

Technical Perspective

Daily Brent oil price action currently displays a long upper wave, but the rest of the day will determine to see if this candlestick sustains and take the 85.00 support handle into account. Essentially, supply issues might indicate increased costs, but until there is greater clarity regarding Russia’s reaction function, markets will stay cautious.

Key resistance level

Key support level

Simple Moving Averages- Daily