Crude oil prices briefly jumped above the $36 handle overnight and retraced most of the gains afterward. On Friday, Brent saw some profit-taking early in the day but regained the bullish momentum and climbed back above $32.
The record rally was fueled by Trump’s tweet. The President wrote that Saudi Arabia and Russia are in discussions to cut oil production up to 15 million barrels a day. Furthermore, Saudi Arabian officials said they are calling an emergency meeting of the largest oil producers, with investors taking this message as a sign that the price war could be over soon for the sake of higher oil prices.
Despite there was no confirmation from Riyadh or Moscow about the scope of any cuts, the futures remain elevated, with traders awaiting further details of a possible deal between top exporters. As a reminder, Russia’s President Putin called on global oil leaders to address the challenging uncertainty in the market amid the ongoing coronavirus pandemic.
The risk is that the producers may face a lack of consensus on possible measures to support the market, and it will be quite difficult to make coordinated cuts after the OPEC+ members failed to agree on the extension of their deal and caused a plunge in oil prices along with virus-related news.
In the short term, Brent crude needs to firmly regain the $32 figure so that to extend the recovery towards $36 and higher. However, traders may prefer to take profit ahead of the weekend due to the lingering uncertainty surrounding both the coronavirus and the potential steps by large producers.
On the downside, the key immediate support now arrives at the $30 psychological level while an even more important barrier for bears comes around $28. Should the futures fail to stage sustainable gains in the near term, Brent may easily get back below $30 by the end of the day and the week. For now, it looks like the market will be able to at least stay afloat.