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Crude Oil Prices Likely To Remain Firm If OPEC Agrees To Maintain Production Cut

By Abhishek BansalCommoditiesMar 30, 2021 06:54AM ET
www.investing.com/analysis/crude-oil-prices-likely-to-remain-firm-if-opec-agrees-to-maintain-production-cut-200570257
Crude Oil Prices Likely To Remain Firm If OPEC Agrees To Maintain Production Cut
By Abhishek Bansal   |  Mar 30, 2021 06:54AM ET
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Oil prices have rebound from the recent low of $57.25 and currently sustaining near $61. Crude oil prices have received support from speculation that OPEC+ will agree to maintain its crude production cuts in May when it meets Thursday.

Crude oil prices also found support after a report from Bloomberg that Foot traffic in U.S. airports rose to nearly 1.6 million on Sunday at the highest since the pandemic started. Jet fuel consumption may accelerate now as American Airlines (NASDAQ:AAL) pledges to mobilize most of its fleet in the wake of surging travel demand at home and overseas. It is likely to support oil prices in the near term.

According to the CFTC Commitments of Traders report for the week ended Mar. 23, net long for crude oil futures declined by 2387 contracts to 523055 for the week. The speculative long position gained by 2507 contracts, while shorts rose by 4 894 contracts.

The crude oil rally was capped after Suez Canal reopened. A container ship that ran aground in the Suez canal last Wednesday and blocked tanker traffic through the canal was freed. About 1 million BPD of crude oil normally passes through the canal every day.

Crude oil prices are also likely to face stiff resistance on account of increasing rig count, US oil inventories and US oil production numbers. Baker Hughes reported last Friday that active U.S. oil rigs rose by +6 rigs in the week ended Mar. 26 to a 10-3/4 month high of 324 rigs and well above August's 15-year low of 172 rigs.

Last Wednesday's weekly EIA data showed that U.S. crude oil inventories as of Mar. 19 were +6.4% above the seasonal 5-year average, gasoline inventories were -3.4% below the 5-year average, and distillate inventories were +1.3% above the 5-year average. U.S. crude oil production in the week ended March 19 rose +0.9% w/w at 11.0 million BPD and is down by -2.1 million BPD (-16.0%) from the Feb-2020 record-high of 13.1 million BPD.

WTI Crude oil prices are likely to get fresh direction from the OPEC+ meeting on Thursday. However, it may find a strong support base around 50 days EMA at $59.28 and 100 days EMA at $55.06. It may find stiff resistance level around $63.27 and $64.77

Crude Oil Prices Likely To Remain Firm If OPEC Agrees To Maintain Production Cut
 

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Crude Oil Prices Likely To Remain Firm If OPEC Agrees To Maintain Production Cut

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Disclaimer: Mr. Abhishek Bansal is a new-age, first-generation entrepreneur, and the Founder Chairman of Abans Group, a quintessential diversified business group, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, and Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management.
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