Oil rally continues amid tighter supply

Oil prices continue to rise on Saudi Arabia’s commitment to extend its voluntary production cut of 1 million bbl/day into September, with Russia also pledging this week to prolong its production pullback to a lower 300,000 bbl/day, (compared to the 500k bpd cut for August)

These recent moves come amid the wider OPEC+ agreement to keep the production cap throughout 2024.

After a sell-off on Wednesday caused by the downgrade of the US credit rating, the BRN bulls have managed to retaliate and climb above the $85.00 psychologically important level.

Given strong support from the announced production cuts, and a possibility for further tightening in the future, the BRN price might continue its upward trend towards the $90.00 psychological level.

Despite the market’s positive stance on oil prices, BRN may come under pressure if lower-than-expected US NFP stats are posted today, indicating a potential economic slowdown in the world’s largest oil consumer.

On the other hand, a better-than-expected US jobs report may further encourage oil bulls on this fresh evidence of resilient demand in the world’s largest economy.

From a technical perspective, a potentially strong support level is forming at $85.00-$86.00. The Relative Strength Index’s (RSI) proximity to the upper boundary (70 – overbought) may signal a potential technical pullback.