The price of crude oil had dropped almost 40 per cent, lingering in a bearish trend since June with investor concern over supply and demand, as well as fears over a global economic slowdown, aggressive US interest rate hikes and China’s zero Covid-19 policy.
According to the MetaTrader 5 (MT5) on PP Link Securities’ (PPLS) price chart, the price of crude oil fell from a June high of $123.65 per barrel to September’s low of $76.25.
This week, crude oil was trading on an uptrend, with a Wednesday high of $88 per barrel.
The rally started as the Organization of the Petroleum Exporting Countries and its allies [OPEC+] signalled huge cuts to production.
“The Organization of the Petroleum Exporting Countries and its Russia-led allies agreed on Wednesday to slash output by two million barrels of oil a day, delegates said, a move likely to push up already-high global energy prices and help oil-exporting Russia pay for its war in Ukraine,” the Wall Street Journal reported.
Bloomberg said: “As the US battles energy-driven inflation, OPEC’s move drew criticism. White House Press Secretary Karine Jean-Pierre said the cut aligns the group with Russia, while President Joe Biden called it ‘unnecessary’.
“The White House also indicated it could release more oil from the Strategic Petroleum Reserve to alleviate rising prices.”
The New York-based financial news company added that the OPEC+ move indicated energy demand fears.
“A two million-barrel OPEC+ production cut reflects the extent to which the group is concerned about the outlook for energy demand in the face of rapidly tightening monetary policies,” it said.
The price of oil was trading at $87 per barrel on Thursday morning.
In a bullish trend since late September, crude has been trading higher and higher, and looks set to retest the September high of $90.15 per barrel.
Investors may place a buy order in the range of $85-87 per barrel, setting the stop-loss function at $83 per barrel and the take-profit at $91.50.