Crude Oil Price Remains Firm as OPEC Cuts Curb Oversupply

The price of crude oil remains near a five-month high in early trade, underpinned by ongoing OPEC production cuts and US sanctions on Iran and Venezuela.

The latest International Energy Agency (IEA) report highlighted the ongoing effectiveness of these US sanctions and the success of last year’s Vienna Agreement in draining oversupply out of the market, helping the price of oil to rally strongly from $50/bbl. in late-December to a current price of $71.25/bbl.

The IEA warned however that the outlook for global growth remains a concern, just one day after the IMF cut global growth projections.

The IEA noted that while they maintained their forecast of 1.4 million barrels per day, they accept that there are “mixed signals about the health of the global economy, and differing views about the likely level of oil prices.”

The chart below shows the recent narrow daily trading ranges in oil with the general uptrend still in place. The market continues to flash an overbought signal but is propped up all three moving averages and 38.2% Fibonacci retracement at $70.56/bbl./dailyfx.com

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