OPEC cut creates bullish gap in Oil

OPEC cut creates bullish gap in Oil
The recent weekends have been quite eventful. First, we had a whole banking crisis saga happening on the weekends and this time, the main hero was oil. On Sunday, OPEC unexpectedly announced a production cut. Saudi Arabia will cut their output by 500k barrels a day and other countries will follow suit with smaller cuts. This is, naturally, positive news for oil, but negative for combating the rising inflation.
WTI and Brent opened significantly higher, with WTI reaching the 82 USD/bbl resistance and Brent jumping high above the long-term down-trendline. In both cases, the price created a huge bullish gap. Gaps are usually closed sooner or later and, in this case, sellers started the move to close the gap pretty early on. The price is not going lower without a bigger bullish resistance. Sometimes, a big gap is a curse in disguise. Soon enough, all the profits might be gone and we may come back to square one. We need to remember one thing - production cuts can be influential in the short term, but the long-term appetite for oil is influenced by the state of economy. If we are about to see an economic slowdown, the oil demand will also decrease, and so will the price.

Indices had a great end of the previous week and month; the candle on Friday was really impressive. This week will probably bring us a bearish correction, as the bullish rally seems pretty stretched.

Gold starts the new month with a breakout to the downside from the symmetric triangle pattern. The European session starts with the price testing the horizontal support on the 1950 USD/oz. This may serve as support but does not really have to, especially since the EURUSD is going lower as well and there is a certain correlation between the two.

Today’s calendar has two important events with the first one already published. Inflation in Switzerland dropped and came much lower than expected (0.2% vs 0.4%). The rate rises from SNB work! The second key data for Monday is the ISM manufacturing PMI which will be released after the start of the American session.
Show More Articles
Axiory uses cookies to improve your browsing experience. You can click Accept or continue browsing to consent to cookies usage. Please read our Cookie Policy to learn more.