Saudi Arabia’s recent decision to slash oil output by 1 million barrels per day, aligning with OPEC+ supply cuts, could provide a much-needed boost to Brent Crude Oil Futures (NYMEX: BB). However, concerns about a global economic downturn and an uncertain energy landscape continue to cast a bearish shadow, leaving traders unsure about the future of the oil market. 

If the Federal Reserve puts a halt to further interest rate hikes, it may stimulate demand for Brent crude oil futures. Additionally, an anticipated increase in China’s Balance of Trade, scheduled for Wednesday, may pave the way for a potential surge in demand from the world’s largest oil importer. Will the decrease in supply succeed in driving demand for oil up, or will the price of Brent Crude Oil continue to see flames? 

Technical 

The Brent Crude Oil Futures are consolidating between $73.75 per barrel (BLL) and $77.66 BLL. The bulls have succeeded in breaking out of the consolidation phase and have found resistance at $78.34 BLL, hence they may aim to edge the price level past this point before driving the price up further if economic data supports a rise in demand for oil.  

However, the supply cuts might not be enough to boost bullish sentiment, which may give the bears the opportunity to drive the price level out of the consolidation phase and towards the $72.04 BLL support, as the price level edges over the 50-day moving average, possibly supporting the continuation of the current downward trend.  

Summary 

Saudi Arabia’s 1 million bpd supply cut may not be enough to boost trader sentiment, which may give the bears the opportunity to edge the price out of the consolidation phase and towards the $72.04 BLL support. However, if demand for oil picks up, the bulls could drive upward momentum towards the $78.34 BLL resistance.  

Sources: TradingView, Reuters, NPR