OPEC Cuts Spark Bullish Shift as Crude Reclaims Key Levels

Energy Update

/ by Blue Line Futures

OPEC Cuts Spark Bullish Shift as Crude Reclaims Key Levels

**Bias shift to Bullish / Neutral from Neutral
WTI Crude Oil Futures (May)

FINAL REPORT ON MAY CONTRACT, ROLL TO JUNE ADVISED 

 

 

Yesterday’s Settlement: 62.47, up +1.14 [+1.86%]

WTI Crude Oil futures ended the day higher on overnight US-China headlines, Dollar weakness, and updated compensation cuts from OPEC. The EIA report printed fairly bullish.

Chinese officials stated overnight that they would be open to talks with the Trump administration if more respect was shown for China. Markets took this as a move in the right direction overnight, helping drive a risk-on trade to start the U.S. session. 

The Dollar fell precipitously yesterday, with Dollar Index futures ending the day 0.92% lower. Yesterday’s weakness in the Dollar came alongside strength in Treasury markets, which was a welcome sign regarding confidence in US assets. 

The EIA report printed fairly bullish, the figures were as follows [thousand bbls]:

  • Crude: +515 vs +945 estimate
  • Gasoline: -1,958 vs -1,707 estimate
  • Distillates: -1,851 vs -1,140 estimate
  • Refinery Utilization: -0.40% vs +0.45% estimate

U.S. gasoline demand remains robust. 

The updated compensation cuts out of OPEC are an important fundamental catalyst that changes our outlook on crude fundamentals moving forward. The cuts are meant to offset 4.57mln bpd of historical overproduction by June of 2026. The listed cuts offset the +411k bpd increase to production that OPEC announced on April 4th. 

The OPEC production increase was a prime driver of this move down into the low 60s and has been the core catalyst behind our bearishness. If these cuts are followed, Crude prices could rebound to the 65.00-70.00 level.  

Today, Crude Oil is up +1.14 [+1.82%] to 63.61 

WTI Crude Oil is trading higher today on yesterday’s OPEC compensation cuts and bullish news coming out of the Iran-US nuclear talks.

The macro environment is trading risk-on with equities and the Dollar rebounding. Treasuries are trading weaker alongside precious metals.

As stated above, the OPEC compensation cuts announced yesterday greatly improve the core fundamentals of the crude oil supply and demand situation.

While news out of the Iran-US nuclear talks had been surprisingly positive, the Trump administration once again stated that they would reduce Iran’s ability to export oil and sanctioned a Chinese refinery accused of taking Iranian imports.  

Technical Analysis:

Our key for this week was to see May futures take a run at last weeks high of 63.34**. Today, we are trading above that level. If we get a settlement above this level, in conjunction with the shift out of OPEC, our bias has shifted bullish. 

Traders may be apprehensive about taking on risk ahead of the long weekend, but the fundamental and technical picture has greatly improved since the start of the week. 

A headline can still swing these markets, and traders should position themselves with the expectations of outsized volatility. Still, our bias has shifted bullish with a target of 68.00 – 70.00 (67.50 target for June futures).  

For intraday trading our pivot and point of balance is set at 63.00 with support at….

 

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Futures trading involves a substantial risk of loss and may not be suitable for all investors. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

Blue Line Futures is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that the NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians, or markets. Therefore, carefully consider whether such trading is suitable for you considering your financial condition.

With Cyber-attacks on the rise, attacking firms in the healthcare, financial, energy, and other state and global sectors, Blue Line Futures wants you to be safe! Blue Line Futures will never contact you via a third-party application. Blue Line Futures employees use only firm-authorized email addresses and phone numbers. If you are contacted by any person and want to confirm your identity please reach out to us at info@bluelinefutures.com or call us at 312- 278-0500

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