Brent oil recovers from 15-month lows on reports OPEC is planning deeper output cuts
- Brent is currently trading at $55 per barrel, having hit a 15-month low of $54.24 yesterday.
- The recovery is likely associated with reports stating that OPEC is planning deeper cuts to shore up prices.
Brent oil has regained some poise, having tumbled 5 percent in the last session.
As of writing, the front-month contract is trading at $55 per barrel. Prices hit a low of $54.24 yesterday - a level last seen on Sept. 13, 2017.
Oil seems to have picked up a bid on reports that the Organization of the Petroleum Exporting Countries (OPEC) is planning deeper output cuts. OPEC's Secretary General Mohammad Barkindo on Thursday said that the cartel is planning to release a table detailing output cut quotas for its members and allies such as Russia.
Barkindo said to reach the proposed cut of 1.2 million barrels per day (bpd), the effective reduction for member countries would need to be 3.02 percent. That is higher than the initially discussed 2.5 percent discussed earlier this month, according to Reuters.
That, however, is unlikely to produce a move strong enough to invalidate the bearish setup, as indicated by the bear flag breakdown on the daily chart and the rising wedge breakdown in the monthly chart indicates the path of least resistance is to the downside. Moreover, the concerns of oversupply, slowing global economy and record US production could continue to put downward pressure on prices.