Is Crude Gearing Up for Turbulence Ahead of the OPEC Meeting?

Is Crude Gearing Up for Turbulence Ahead of the OPEC Meeting?

Crude oil posted over two per cent gain on Wednesday. Prices were strongly supported as sentiment turned cautious ahead of a crucial OPEC meeting to decide production policy in coming months, while a supply disruption caused by a Black Sea storm lifted prices.

Both indicators benefited from the possibility of extending or deepening supply cuts by the Organization of the Petroleum Exporting Countries and its allies such as Russia (OPEC+), as well as concerns about Kazakhstan’s oil production and a weaker US dollar.

OPEC+ is due to hold an online ministerial opec meeting on Thursday to discuss 2024 production targets, after delaying the meeting from November 26.

The talks will be difficult and a rollover of the previous agreement is possible rather than deeper production cuts, four OPEC+ sources said.

Furthermore, The dollar suffered near a three-month low against its major peers in anticipation that the Federal Reserve could begin lowering rates by early next year. A weak dollar usually supports oil prices because it makes oil cheaper for holders of other currencies.

Apart from this, U.S. crude oil inventories fell by 817,000 barrels last week, according to market sources citing American Petroleum Institute figures. U.S. government data on stockpiles is due on Wednesday. Which will add volatility to the prices.

Technical Outlook:

Crude oil prices have stalled its bearish trend that started on 28 September 2023. From the peak of 7884 to low of 6000 (16 November 2023). Prices enjoyed the recovery rally, yesterday it gained more than 2.30% and settled at 6413 compared to previous day’s close of 6267.00.

On the above chart, formation of a falling wedge pattern is indicating continuation of the recent rally in near future. However, prices would need to cross massive resistance 6510 in order to jump towards 6640-6750.00.   Else, any correction towards 6380-6350 could attract buying activities.

Alternatively, on the downside crucial support is seen at 6150 and a break below it prices may retreat towards previous low 6000 and below it 5860.00.

Overall momentum will depend on the Snaky headlines from the OPEC meeting. Hence, stay cautious before trade.

Commodity Samachar
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