Oil Price Forecast: OPEC+ Plans to Cut Output, Reducing Global Demand by 3.7%

Highlights

• OPEC+ reduces output targets by 1.16 million bpd
• Analysts predict Brent to reach $100 by 2024
• Higher oil prices may lead to inflation and recession fears

Overview

Oil prices rose on Tuesday after OPEC+ announced plans to further reduce output targets by 1.16 million barrels per day. This brings the total reduction to 3.66 million bpd, which equates to roughly 3.7% of global demand.

At 09:57 GMT, June WTI crude oil is trading $81.00, up $0.56 or 0.70%. On Monday, the United States Oil Fund ETF (USO) settled at $184.51, up $1.29 or +0.70%.

OPEC+ Cuts Output, Analysts Raise Price Forecasts

OPEC+ plans to cut output, causing oil prices to rise. Reduction equals 3.7% of global demand. June WTI crude oil is trading at $81.00, potentially increasing to $86.40.

Analysts raise Brent oil price forecasts to $100 per barrel by year-end. Goldman Sachs predicts Brent to reach $95 per barrel by end of 2022 and potentially $100 by 2024. However, demand must shift to sustain prices.

Higher oil prices may lead to inflation and recession fears. Short-term demand may increase for summer driving season. But prolonged interest rate hikes could dampen demand.

The global financial industry is monitoring oil market developments. Market watchers are assessing impact on interest rate hikes and economic growth.

Daily June WTI Crude Oil Technical Analysis

The main trend is up according to the daily swing chart. A trade through the Jan. 23 main top at $82.98 will reaffirm the uptrend. A move through $64.58 will change the main trend to down.

The market is currently trading on the strong side of a key retracement zone at $78.06 to $75.49, making it support.

The important upside targets are the main tops at $82.98 and $86.40.

Daily June WTI Crude Oil Technical Forecast

Trader reaction to $80.41 is likely to determine the direction of the June WTI crude oil market on Tuesday.

Bullish Scenario

A sustained move over $80.41 will indicate the presence of buyers. If this creates enough upside momentum then look for a possible surge into $82.68 – $82.98.

Bearish Scenario

A sustained move under $80.40 will signal the presence of sellers. If this generates enough downside momentum then look for the selling to possibly extend into $78.06.