How latest OPEC+ move to cut oil output may impact you: Know what experts have to say

OPEC+ announced on Sunday that it will reduce oil output by more than 1 million barrels per day, breaking its promise to keep supplies constant to keep the market stable.

According to calculations by Reuters, the commitments raise the overall amount of cutbacks by OPEC+, which includes Russia and other allies in addition to the Organisation of the Petroleum Exporting Countries (OPEC), to 3.66 million bpd, or 3.7% of world demand.

However, due to the upheaval brought on by the bankruptcy of a Silicon Valley bank and the bailout of Credit Suisse AG, oil prices last month reached a 15-month low. When the financial crisis began to show signs of stabilisation, prices had regained the majority of those losses. Brent crude closed Friday at just under $80 per barrel, up 14% from its March low.

Let's see what experts have to say about this development.

Ajay Kedia, founder & director of Kedia Advisory commented, "This latest reduction in production could lift oil prices by $10 per barrel, and we can expect MCX crude prices to cross the Rs 7,000 level mark soon in April itself. Technically, building long positions and holding them for targets of 6700 could see prices move towards the 6850 level, as long as the prices remain above 6150 and (momentum indicator) RSI continues to show upside momentum."

"Overall, the crude oil market is showing signs of optimism and a potential rebound, given the latest production cuts by OPEC+ and the positive outlook provided by Goldman Sachs. However, market uncertainty and geopolitical tensions can still have a significant impact on the market, and investors should approach them with caution," Kedia added.

Rahul Kalantri, VP Commodities, Mehta Equities

Crude oil is set to open with a gap up on MCX today, thanks to the latest announcement by OPEC+ that it will cut production by around 1.16 million barrels per day (bpd) from May till the end of the year. The weekly performance of MCX Crude oil was impressive as it rose by 8.90 per cent and closed at 6199 on Friday. 

The price movement reflects the volatility and uncertainty in the global oil market.

The announcement by OPEC+ is a surprising move, as the market had expected the cartel to maintain output levels. The fresh slash now brings the total production cut by OPEC+ to 3.66 million bpd. This latest reduction in production could lift oil prices by $10 per barrel, and we can expect MCX crude prices to cross the 7,000 level mark soon in April itself.

We expect crude oil prices to remain volatile in today’s session. Crude oil has support at $78.80–77.50 and resistance at $80.70–81.80 in today’s session. In INR Crude oil has support at Rs 6,550-6,420, while resistance is at Rs 6,870–6,980.

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