OPEC+ Preview: Will 1,000,000 bpd cut it?

OPEC+ meets on Wednesday to determine what should be done about the amount of crude oil that it supplies to the market. Two weeks ago, the talk seemed to be whether the countries should do anything at all. However, as the price of oil continued to fall, along with weaker manufacturing data and growing fears of a recession, worries of a lack of demand had set in. Rumors started circulating that OPEC+ would cut supply by 500,000 bpd to 1,000,000 bpd. Over the weekend, the rumors were that OPEC+ would cut up to 1,500,000 bpd. Russia is said to be leading the way for the supply cuts, as western countries would then need to look to alternative sources for energy. Earlier today, OPEC+ canceled the Joint Technical Committee meeting scheduled for October 4^th. The decision to cancel this meeting means that they have agreed to an output cut. Therefore, there is no need for the technical meeting the day prior. But how much will OPEC+ cut? The consensus now seems that they will cut by 1,000,000bpd. If so, this would be the largest supply cut since the start of the pandemic on April 2020.

WTI Crude Oil has been moving aggressively lower since June 14^th when oil traded as high as 123.66. (On March 8^th, oil reached a high of 129.42!) Since then, price has been moving in a downward sloping channel with brief false breaks above and below the channel. On September 26^th, WTI made a near-term low of 76.28. Today, Crude Oil has bounced to the top trendline of the channel, up 5%, as traders speculate on the amount of oil OPEC+ will cut on Wednesday.

Source: Tradingview, Stone X

On a 240-minute timeframe, WTI Crude Oil traded up to the top trendline of the channel, which is also the 38.2% Fibonacci retracement level from the highs of August 30^th to the lows of September 26^th, near 84.57. The next levels of resistance are at the 50% and 61.8% Fibonacci retracement from the same timeframe at 87.07 and 89.56, respectively. However, if the resistance holds first support will be at the gap fill from this weekend at 79.89. Below there, WTI can fall to the September 26^th lows at 76.48 and then horizontal support from December 9^th, 2021 at 73.30.

Source: Tradingview, Stone X

Will OPEC+ cut back on supply on Wednesday? If so, by how much? It seems like the consensus is for a 1,000,000 bpd cut in supply. If that is the case, be careful of a “buy the rumor, sell the fact” trade. Crude oil traded up nearly 5% today. If price continues higher, there may be a pullback on the actual release if it is in line with consensus.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.