Crude oil prices have recovered marginally on Wednesday, with Brent managed to keep above the $74,50 area and finished at $75,73. The immediate resistance comes at $76 – a break above will confirm some easing of a downside pressure. However, in the bigger picture, the bearish risks still persist, and the 20-DMA around $77,50 is unlikely to be challenged any time soon.
The local rebound was mainly due to the reports that Venezuela is considering force majeure on oil exports. The potential stoppage in deliveries from a major OPEC producer has eased oversupply fears as US officials ask the cartel to increase production. By the way, Saudi Arabia’s Aramco has raised its crude oil prices for Asian buyers to the highest since 2014, citing threats to rival suppliers. This step has also supported Brent.
In the short term, the market will likely remain focused on Venezuela but this won’t be enough to alleviate concerns over the possible OPEC production increase amid the non-stop rise of activity in the US shale oilfields. Shale production reached 10.8 million bpd last week, coming closer to the 11 million mark.