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Oil prices rise after OPEC + decides to extend production cut

On Monday, oil is trading in the green zone, reacting to the agreements reached at the weekend on the extension of restrictions on OPEC + oil production.

The deal to reduce production by 9.7 million barrels per day is extended until the end of July. Iraq and Nigeria pledged to fully comply with the terms of this agreement (in May, both countries exceeded the established production quotas). According to media reports, Saudi Arabia, Russia and the OPEC Secretary General will hold a press conference today. The details were not disclosed, but most likely, it will be devoted to the results of the OPEC + video conference held on Saturday.

The overall situation on stock exchanges has a positive effect on oil prices. Demand for risky assets is growing after the publication of the US labor market report on Friday. Investors hope for a faster recovery in the global economy. This process must inevitably be accompanied by an increase in energy demand.

Investors also expect disruptions in oil supplies from the Gulf of Mexico. Offshore production may be reduced by 30% due to the Cristobal tropical storm. Although, according to weather forecasters, on Monday the force of the storm decreased significantly.

On the chart, the bulls tested an important psychological resistance level of 40.00. On the first attempt to gain a foothold above they failed, therefore, from the current levels, we are waiting for the development of a retreat in the direction of levels 38.80 and 38.00.

  • Resistance levels: 40.00, 41.00, 42.00.
  • Support levels: 38.80, 38.00, 35.70.

The main scenario - a decline to 38.00

An alternative scenario is consolidation above 40.00 and growth to 41.00.

The current fundamental background is moderately positive. We consider longs from the level of 38.00.

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