Crude Oil has been showing resilience lately and WTI crude just jumped more than $1 after OPEC announced that they will extend the output quotas beyond Q1. Spot Oil is trading below $79 and still has the major resistance level at $80 to take out, so we’re watching the price action.

OPEC Announces Oil Production Cuts

According to the media, OPEC is thinking to extend the voluntary oil supply cut into the second quarter, with the possibility of extending them further until the end of the year. The current cuts amount to 2.2 million barrels per day, with Saudi Arabia implementing additional cuts on top of that. However, there are indications that Saudi Arabia may gradually resume production in April, which could be a significant factor for Oil markets in the coming weeks.

Sources cited in the report suggest that an extension of the cuts into the second quarter is “probable,” with the possibility of a longer extension until the end of the year. Most analysts had initially anticipated an extension until the summer, as January and March are typically slower months for oil demand, resulting in stockpile accumulation. However, positive indicators such as strong Chinese travel during the Lunar New Year have led to increased purchasing from China, potentially influencing the decision to extend the cuts further.

The report also notes that some refineries may be increasing run rates or postponing maintenance plans due to strong demand momentum following the Lunar New Year travel. Chinese spot crude buying has been slightly stronger than expected, indicating potential strength in demand moving forward.

US WTI Crude Oil Live Chart