Crude oil analysis: WTI off lows as focus turns to OPEC+ meeting

Crude oil analysis: Investors await OPEC+ meeting Nov 30
We expect rollover of Saudi and Russia cuts
WTI needs an interim higher high above $77.60-$78.50 to signal trend reversal

After a 5-week decline and a weak start to this week’s trading, crude oil prices were coming off their lows at the time of writing, recovering some of the 1.3% earlier decline. Oil prices will remain in focus after the OPEC+ last week decided to delay their meeting by three days as reports suggested that members could not agree on output levels. The group are now due to meet on the last day of this month on Thursday. Oil prices will be in for a volatile few days. Traders will be trying to predict what sort of action will be taken and the impact they will have on oil prices in the near-term outlook. Judging by the recovery of oil prices from their earlier lows on Monday, they are expecting the OPEC+ to extend curbs on supplies into 2024. The sharp declines over the past several weeks means investors have now priced in much of the negative influences related to the demand-side, with global data being poor for much of this year and US stockpiles rising sharply in recent weeks, all to suggest that demand is weaker than expected.

Crude oil analysis: It is all about OPEC+ meeting this week

Last week saw oil prices take a tumble after the OPEC and allies including Russia (AKA OPEC+) postponed a ministerial meeting by three days to November 30. Apparently, there are differences on production targets for African oil producers. It is clear that Saudi is dissatisfied with some of the other OPEC+ members who are not complying with the cuts. According to Reuters, those differences have now narrowed, with the group moving closer to a compromise. But while the group’s de facto leader Saudi Arabia seeks quota cuts, some of the other members are resisting, according to some reports. All told, I expected a breakthrough in the talks. Saudi Arabia is likely to roll over its additional voluntary cut of 1 million barrels per day (bpd) into next year, and Russia should likewise extend its own cuts, at least until the first quarter of 2024. If so, this should alleviate some of the selling pressure on oil prices moving forward.

WTI crude oil technical analysis

Crude oil prices have started to show some signs of bullishness on the lower time frame, but this hasn’t stopped the bears to defend key resistance levels. The bulls are still in need of seeing an interim higher high to provide a clear indication of a bottom. With key resistance coming in around the $77.60 to $78.50 range (see shaded area on the chart), WTI will need to climb above here to signal change in the trend, especially as we also have both the 21 and 200-day moving averages converging within this zone too.

Source: TradingView.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.

The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.

FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.

FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.

GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.