Statements by a Saudi official put oil prices back on the rise

After an unsuccessful downward attempt at the beginning of the week, yesterday WTI crude oil quotes switched to strong growth. After gaining over 2%, the price of oil moved back to resistance at 74, which had already stopped the previous upward impulse 2 weeks ago. However, considering yesterday's comments of the Saudi official, the chances of breaking through the level of 74 and further movement towards 76.15 are much higher.

The current situation in the oil market is very similar to the one two months ago. At that time, ahead of the OPEC+ meeting, representatives of the oil-exporting countries actively supported the price rise with verbal interventions, which eventually led to an agreement on an additional reduction of production quotas. There is only a week and a half until the next OPEC+ meeting, and the local trend of rising prices for oil is observed again.

The trigger for the impulse in oil prices was the comments of Saudi Arabia's Minister of Energy, Prince Abdulaziz bin Salman. He encouraged market participants with short positions to be very cautious before the meeting of OPEC+ countries' representatives on June 4. The minister said that the organization of exporting countries will act proactively to prevent imbalances in the oil market, regardless of any criticism.

It is obvious that after the reduction of oil production that has already happened, traders and investors took the words of the Saudi official very seriously and rushed to close a significant part of short positions. The last week statistics from the American Petroleum Institute about the reduction of the U.S. reserves by 6.8 million barrels also contributed to this. Inventories of petroleum products are also declining, and this may become an important factor in the rise of prices for oil ahead of summer demand growth.

Now the WTI oil quotes are at resistance of 74. Further price dynamics will depend on whether the bulls have enough strength to break through this level. In case of success, the growth target will move to 76.15.

The following trading strategy option can be suggested:

Buy WTI crude oil when it breaks the 74 level from the bottom to the top. Take profit – 76.15. Stop loss – 71.8.

Also, traders may use Trailing stop instead of a fixed Stop loss at their convenience.