Crude oil pings higher as specs told to ‘Watch Out’ by OPEC+

Crude oil staged a rally going into Thursday despite the US dollar roaring higher alongside Treasury yields.

Comments from Saudi Arabia Minister of Energy Abdulaziz bin Salman, assisted the bounce when he rattled the sabre, saying, “speculators, like in any market, they are there to stay. I keep advising that they will be ouching. They did ouch in April. I don’t have to show my card, I’m not [a] poker player… but I would just tell them, watch out.”

In early April, OPEC+ announced that they would cut production by 1.1 million barrels per day. This news saw crude gap higher to levels not seen since November 2022.

The reality is that OPEC+ is notorious for not being able to meet their production target and regularly overshoot.

The weekly US Energy Information Agency (EIA) data released overnight saw stockpiles drop dramatically, overcompensating for last week’s run-up in inventory.

12.456 million fewer barrels were stored in the week ending May 19th. The week prior saw 5.04 million barrels added.

Elsewhere, the Canadian wildfires appear to have been contained to a certain extent for now and it’s being reported that production and supply are back to normal levels.

For now, it appears that the shorts have been squeezed but it seems there is a lack of follow-through at this point.

WTI crude oil technical analysis

WTI overcome resistance making a high of 74.73 overnight. The 34- and 100-day Simple Moving Averages (SMA) are just above the market and may lend resistance near 75.15 and 76.92 respectively.

On the downside, support might be at previous resistance levels down toward 73.60. Further down, support may lie at the breakpoints and prior lows of 69.41, 66.82, 66.12, 64.36, 63.64 and 62.43.

Crude oil daily chart

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