Oil prices surge after voluntary production cuts

Economic events impacting oil prices

Amid concerns about oil supply, oil prices surged following the announcement that Saudi Arabia and Russia will extend their voluntary production cuts until the end of the year. A representative from the Ministry of Energy confirmed that Saudi Arabia will extend its voluntary production cut by an additional one million barrels per day, continuing until the end of December of this year. Deputy Prime Minister Alexander Novak also revealed that Russia will prolong its voluntary reduction of oil exports by 300,000 barrels per day until the end of this year.

These voluntary production cuts by Saudi Arabia and Russia come in addition to the April reduction agreed upon by various OPEC+ producers, which is scheduled to continue until the end of 2024. It's worth noting that Saudi Arabia and Russia have expressed their intention to review these production cuts on a monthly basis, with adjustments being made based on market conditions.

Oil prices started the third session of the week with a slight rise and currently trading near $86.74 per barrel.

Key technicals

Crude oil has successfully surged past the significant resistance level at $84.00, which has contributed to further upward momentum, pushing prices to around $87.00. It is likely that this upward trend will continue, with the aim of testing resistance levels at $90.00. If there is a breakthrough beyond this level, it could lead to an extension of the rally to $92.00.

However, if there is a retreat from the current levels, oil may find support in the range of $84.00 to $85.00, which forms a strong support area that needs to hold to confirm the intention for further upward movement.

Nevertheless, if oil prices decline below this range, it may trigger additional downward pressure, potentially leading to a test of the $80.00 level, followed by $78.50.