Oil prices exhibited mostly bullish behavior last week, with West Texas Intermediate (WTI) surpassing the $80 mark despite a surprising increase in U.S. crude oil inventories, which saw a 4.199 million barrel rise for the week. However, the sentiment remained positive as OPEC+ announced its decision to extend production cuts for the second quarter of 2024, contributing to the overall bullish sentiment in the Oil market.

OPEC Production Cut Extension Is Official

OPEC+ has decided to extend current production levels through the second quarter, maintaining the hope of tightening the market as the summer approaches when traveling and driving increases considerably. Saudi Arabia will continue its voluntary cut of 1 million barrels per day (bpd) until the end of June, gradually reversing cuts based on market conditions. Similarly, Russia’s Novak confirmed that cuts of 471k bpd will persist through Q2.

While there were expectations of this extension, as indicated in a report last week, the market response may be muted as some had even speculated about extending cuts through the end of the year. Additionally, there’s a possibility that the decisions were leaked on Friday, coinciding with Oil prices breaking above $80 for the first time in three months after a Reuters poll released earlier suggested that global Oil supplies want to maintain Oil prices around $80/barrel throughout 2024.

Crude Oil Technical Analysis

Oil prices concluded the week on a strong note, with the 20 SMA (gray) acting as support. The US benchmark West Texas Intermediate (WTI) price climbed over 4% compared to the previous week. The chart indicates that WTI is about to break a crucial resistance zone within the range of $79-80.

While the price failed to close above $80 last week, it did break the 200 daily SMA (purple) which was acting as resistance on the daily timeframe. So, this week holds significance for Oil, as a bullish breakthrough above $80.00 could pave the way for a swift continuation towards the $84-85. However, if buyers fail to break above and the price retreats, traders might be inclined to buy into any dips that occur within the 75.00-76.00 range.

US WTI Crude Oil Live Chart