OPEC Meeting Sparks WTI Oil Traders’ Anxiety
21 Nov 2023
This week’s oil prices are rising as markets prepare for OPEC’s output cuts.
- WTI Oil traders prepare for potential headline risks as OPEC ministers convene this weekend.
- The ongoing weakening of the US Dollar remains a supportive factor for commodity prices.
- If the upcoming OPEC+ meeting reveals additional and extended production cuts, Oil might see a rebound to $84.
Oil prices have surged for two consecutive days as traders anticipate potential supply cuts from OPEC+. While the scheduled meeting is on November 26th, market rumors suggest that Saudi Arabia may extend and expand its production cut both in volume and duration. This situation leaves oil refineries in a challenging position, with rising stockpiles leading to reduced demand, thinner margins, and dwindling supply.
Simultaneously, the US Dollar (USD) is establishing a new two-month high and is currently at a pivotal juncture in terms of price action within the US Dollar Index (DXY). The DXY price intersects two significant technical moving averages, indicating the potential for a more significant downside. This could result in a further easing of the Greenback, such as against the Euro (EUR/USD) to 1.1180, implying an additional 2.5% devaluation for the USD.
Oil news and market movers: Oil market on the lookout for OPEC.
Russia has reduced its seaborne crude exports to the lowest level since August, countering the recent uptick in October ahead of an OPEC minister’s meeting.
RBC Capital Markets LLC warns of potential deeper production cuts at the upcoming OPEC+ meeting on November 26th, suggesting a collective effort beyond Saudi Arabia.
Iranian Oil Minister Javad Owji anticipates an increase in Iran’s oil production.
This Tuesday, the American Petroleum Institute will release its weekly stockpile numbers, with no forecast after the previous week’s build of 1.335 million barrels.
Technical Analysis: OPEC to make a move
Oil prices are poised for fluctuations, driven by heightened market anticipation of potential production cuts from OPEC. The upcoming OPEC+ ministers meeting over the weekend will be closely monitored, with a keen focus on any supplementary measures that could stabilize crude prices—an endeavor currently presenting difficulty. The ongoing Israeli-Palestinian situation adds another layer of uncertainty, particularly following the seizure of a tanker in the Strait of Hormuz by Houthi rebels backed by Iran.
On the positive side, keep an eye on the $80.00 resistance level. If crude manages to climb further, anticipate potential selling pressure or profit-taking around the $84.00 mark (represented by the purple line). If oil prices can maintain consolidation above this point, there’s a possibility that the upper target of around $93.00 for this decline may become relevant again.
On the negative side, traders observe the emergence of a support level of around $74.00. This level serves as the final defensive barrier before potentially descending to $70.00 and below. In that range, markets may consider the possibility of an unexpected intervention by OPEC+ to push oil prices higher once more.