Crude Oil Week Ahead: OPEC Meeting, Key US Data, and Key Levels
Key Events
- Oil prices closed November with a bearish bias
- OPEC JMMC Meetings are expected to delay output hikes for Q1 2025
- Key US economic data introduces volatility risks for the US Dollar and Oil
- Technical Analysis: USOIL and UKOIL
OPEC Plans vs. Trump and China
OPEC’s plan to unwind output cuts through 2025 is met with bearish risks from contracting Chinese demand and Trump’s “drill baby drill” agenda. Bessant’s 3-3-3 plan further complicates the outlook for oil prices, which now sit cautiously above the 4-year support zone established in December 2021.
Supply quotas pose a two-edged sword for OPEC members. While output cuts limit revenue growth, raising production risks pushing oil prices lower. Trump’s administration could amplify this risk with their aim to slash prices down by up to 50%, potentially impacting OPEC’s market share.
Find my further insights on the OPEC meeting on: MarketWatch: Trump’s Oil Drilling Plans May Pose a Big Problem for OPEC
US Data: ISM PMI and Non-Farm Payrolls
Upcoming US economic data could shape crude oil trends, particularly through its impact on the US Dollar. Key indicators, such as ISM Manufacturing and Services PMI, will influence demand expectations depending on signals of economic growth or contraction. Following the dominating effect of the OPEC meeting decisions, the Non-Farm Payrolls (NFP) report on Friday could have an outsized effect by providing insights into employment levels, a critical factor in assessing potential oil demand.
Technical Analysis: Quantifying Uncertainties
Crude Oil Week Ahead: USOIL - 3-Day Time Frame – Log Scale
Source: Tradingview
As previously mentioned, the 4-year support zone between levels 64 and 65 remains intact, alongside upside risks driven by ongoing geopolitical conflicts. The longer crude consolidates between 64 and 76, the steeper any eventual breakout is likely to be.
The minor consolidation above the 65 support is extending shoulders.
Upside Scenario: A break above resistance levels 72.30 and 76 could pave the way towards 80 and 84, solidifying bullish scenarios on the chart.
Downside Scenario: A decisive break below the 64-support could drive prices toward 58 and 55, with the potential to extend further to 49 and 39.
Crude Oil Week Ahead: UKOIL - 3-Day Time Frame – Log Scale
Source: Tradingview
In a similar analysis to USOIL, UKOIL is holding above the 68-69 support zone, extending from December 2021 lows. Unlike USOIL, Brent has tested the bottom of its declining channel, originating from the 2023 highs. The scenarios are the following:
Bullish Scenario: Failure to break below 68 could see prices rebound towards resistance at 81.30 and 84.30. Further gains could reach 88.60 and 94, signaling a potential long-term bullish trend.
Bearish Scenario: A decisive break below 68 could extend losses to 59 (0.618 Fibonacci retracement of the 2020–2022 uptrend), with further downside risks toward 53 and 43 if the 59 support is broken.
--- Written by Razan Hilal, CMT – on X: @Rh_waves
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