Oil prices trade lower on OPEC+ news and global growth concerns

[MongiIG]

The price of Brent crude oil is forming a technical price reversal following OPEC+'s scheduled production increases and global growth concerns.

Source: Bloomberg

 Shaun Murison | Senior Market Analyst, Johannesburg | Publication date: Thursday 30 June 2022 

OPEC+ to stick to production plans

The Organisation of Petroleum Exporting Countries (OPEC) and their allies (OPEC+) have concluded two days of discussion regarding the future of oil production on Thursday the 30th of June 2022.

At the group’s previous meeting (2 June 2022), OPEC+ had agreed to increase production by 648 000 barrels per day in July and then again in August. This being a noteable increase from the 432 000 barrels per day rise in output for June.

The OPEC+ meeting has seen an affirmation of the production increases suggested at the beginning of the month with no further changes guided.

The news has resulted in a slight selloff in Oil - Brent Crude prices, although this may also be attributed to global growth concerns currently prevalent in the marketplace.

Brent crude – technical view

Source: ProRealTime

 

The short-term rebound in Brent crude has started to fade and is looking to reverse in the near-term.

The black arrow marks yesterday’s candlestick pattern, commonly referred to as a gravestone doji in technical analysis term.

The pattern marks an intraday price reversal, suggesting the short-term end to a move higher and possible change in near-term direction. Should today’s candle close in negative territory it would suggest the confirmation of the reversal, with $106.00/barrel the initial downside support target from the move.

Traders who have been long into the rebound from oversold territory might consider locking in profits. Traders respecting the longer term uptrend still in place would, however, not consider the possible move lower as short trade opportunity. Instead our preference is to wait for weakness to play out before once again looking for long entry on a bullish price reversal closer to one of the lower support levels marked on our chart.

Only in the event that the short-term weakness in oil breaks the major lows between $98.90 and $95.50 per barrel, would we reassess our longer term trend bias for trades on the commodity.