Brent oil strengthened to $52.81 (61.8% Fib Retracement of Apr high - May low) on optimism that most OPEC members back the output cuts deal extension.
Algeria’s Energy Minister Noureddine Boutarfa said Thursday that most OPEC producers are supporting the Saudi-Russian proposal for an extension of the production cuts until March 2018.
Earlier this week, the EIA reported a 1.8 million barrels drop in the US oil inventories. That only added to the positive sentiment in the oil markets.
Oil prices may remain well bid as the time for the cuts extension draws near. The OPEC ministers will meet on May 25 in Vienna. According to a Bloomberg survey, 24 of 25 analysts expect the OPEC and its allies to prolong the curbs for at least six months. Meanwhile, some in the markets are already pricing-in a nine month extension.
Brent Technical Levels
A daily close above $52.81 (61.8% Fib retracement of Apr high - May low) would open doors for $54.49 (78.6% Fib retracement) and $55.06 (Apr 5 high). On the lower side, breach of support at $52.27 (50-DMA) would open up downside towards $51.82 (200-DMA) and $51.44 (Apr 26 low).