Crude Oil Daily Forecast – OPEC Reportedly to Cut Output, but Russia is the Game-Changer

Crude is almost unchanged in the Thursday session. Currently, U.S. crude oil is trading at $46.85, down $0.27 or 0.51% on the day. Brent crude oil is trading at $51.58, down $0.50 or 0.26%.

OPEC Wants Deep Cuts but Needs Russia

The markets are carefully monitoring developments at the OPEC+ meeting in Vienna, which began today and will continue on Friday. Oil ministers from OPEC and non-OPEC countries will gather on Friday for a crucial meeting which could have a significant impact on crude prices.

On Tuesday, an OPEC Joint Technical Committee had revised its proposal upwards, calling for a production cut of 600,000-1 million barrels per day (bdp) for Q2 in order to lift sagging oil prices. There are now reports that OPEC is planning to announce a much larger cut, of 1.5 million bpd. Despite these reports, crude is very calm on Thursday, since the OPEC proposal is conditional on approval from Russia.

Will Moscow join the party? That remains unclear, but we’re likely to have an answer on Friday, as OPEC and non-OPEC oil ministers will meet on Friday.  The markets have priced in a cut of around 1 million bpd, and anything less from OPEC could send prices sharply lower. According to Amrita Sen, co-founder and chief oil analyst of Energy Aspects, if “they fail to deliver, I think we’ll test thirties (oil at $30 a barrel).”

The coronavirus outbreak has led to a collapse in demand for crude, and IHS Markit estimated on Wednesday that global oil demand in the first quarter will be 3.8 million barrels per day lower than a year earlier, marking the biggest quarterly drop ever recorded.

Technical Analysis

The line of 47.50 remains under pressure in resistance. Above, there is resistance at 49.50, which is protecting the symbolic 50.00 level. This is followed by resistance at 51.50. On the downside, we find support at 45.92, followed by support at 43.55.