Oil prices rallied sharply on Friday, trading near $79 ahead of the US market open, capping a profitable week. The surge is fueled by expectations that OPEC will extend current production cuts into the second quarter, a key factor supporting current price levels.
Adding to the bullish sentiment, the US Dollar Index (DXY) remains rangebound despite key economic data and hawkish Fed commentary. While Fed officials hint at potential rate cuts later in the year, recent inflation figures suggest the possibility of further hikes to combat lingering price pressures. Crude Oil (WTI) currently trades at $79.27 per barrel, while Brent Oil stands at $83.14.
The market focus remains on OPEC’s commitment to maintaining price stability through output restrictions. While voluntary, these cuts are crucial, and traders will closely monitor export data for confirmation. Further reductions could be necessary to trigger an even stronger market reaction.
Technically, oil bulls are eyeing a breakout above the double top near $79.66, opening the potential for a run towards $86.90 and a near 10% gain. However, significant resistance may emerge near $89.64 before any push towards the $100 mark. On the downside, the 200-day Simple Moving Average (SMA) near $77.72 offers initial support, with the 100-day and 55-day SMAs near $76.25 and $74.83 adding a further cushion. The $75.27 level remains pivotal, suggesting downside risks are limited.