Crude oil prices could look to rally after a recent OPEC proposal to postpone oil production cuts.
USOIL – Weekly Chart
A strong rally last week in oil has the price back above the $70 level and could mount a further rally. The first resistance level comes in around $75.
The surge came after the weekly report from the Energy Information Administration (EIA) revealed that US stockpiles plunged to just 22.9 million barrels, the lowest level since 2007. Oil traders will now put their focus back on the latest forecasts from OPEC, which downwardly revised global Oil demand by 210,000 barrels per day.
The Energy Information Administration (EIA) report said that stockpiles at Cushing, Oklahoma, plunged by the most since early September after a 1.3 million barrel drawdown. Lower imports from Canada likely added to the drawdown, Bloomberg reported.
The OPEC+ alliance is looking at postponing planned production increases next year amid weak demand and competing production from non-allied countries that could keep oil prices stagnant through 2025
Eight OPEC members had planned to restore 2.2 million barrels per day in previous production cuts from January 1. However, analysts now believe that they could delay these increases for another three months while monitoring demand.
Prices have remained subdued after weak demand from China continued due to a weaker economy. A rally on stimulus measures faded as with other markets later this year. Global tensions continue to be a threat and could add to any rally if a low develops.