OPEC tightens supply and offers "voluntary" oil cuts of its members, prior to U.s elections/Central Banks beginning to cut rates in 2024, then they'll add barrels back into the market. The market has over read this as bearish. Oil slump's over 3%, while geopolitical issues remain, as Ukraine can target Russia with U.S. made missiles. Russian Oil refineries maybe targets.
OPEC has set off oil volatility, on the back of cutting oil production, voluntarily, prior to U.S. elections and Central Banks beginning to cut rates tailend of 2024. In other words, it is up to OPEC members whether they cut or increase output, a bearish indicator that demand is weak. Then they'll (OPEC) may start to add barrels again in 2025. Sounds like a plan, right? The markets have read this slightly wrong, but right in the sense that U.S. Dollar selling is picking up speed before the end of 2024. Energy inflation is the last inflationary hurdle, and it is stuck with Stagflation lite already here. So, in turn the oil price has to decline for the Federal Reserve to start its rate cut cycle. But, the whole thing is riding on thin ice.
And the thin ice is always geopolitical:
*The U.S. allows Ukraine to use short-range missiles to target Russian command posts, arms depots, and military targets, excluding long-range attacks - oil.com
*Ukraine maintains refineries are legitimate targets, aiming to impact Russian oil revenue and boost Ukrainian morale - oil.com
*Houthis launch second wave of attacks on Red Sea vessels after deadly British-US airstrikes - Arab News
Oil has crashed from its 29th May high of $80, falling through the psychological support pf $75 (3rd June). Grossly oversold and probably due to short covering, mildly bid at $74. Upper resistance is $78, supported by U.S. Dollar weakness, geopolitical and Central Bank rate cut speculation end 2024. Please refer to Chart 1.
Bonus chart is all my oil study, as a visual spectacle.
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