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Oil prices slip ahead of OPEC decision

Crude Oil Price Analysis and News

  • OPEC+ to decide whether to follow US suggestions on increasing oil supply
  • Brent crude oil is a key support

OPEC+ The conference will be held Today 31St OPEC and the Non-OPEC Ministerial Meeting. The focus will be on the new strategy, now that they are (on paper) producing oil at pre-Covid levels. Pressure is on Saudi Arabia to convince OPEC+ members to increase production after US President Biden’s meeting with the Saudi crown prince, in which the president said he would take further steps to boost production. Oil supply.

However, as shown in a recent Reuters poll, OPEC production is currently significantly below quotas, at around 1.3mbpd. Combine this with the fact that spare capacity is limited for major oil producers with slower economic growth expected over the next year. This appears to be a tall order in expecting a production increase from OPEC+. The sentiment was echoed by OPEC sources, who noted that they see little scope for oil production at today’s meeting. On the flip side, Kazakhstan’s energy minister said current prices of $100/bbl are above the preferred range of $60-80/bbl and thus may need to increase production.

If OPEC+ members fail to agree on production increases, oil prices are likely to rise, boosting oil-sensitive currencies such as CAD and NOK. Meanwhile, with oil prices retreating as we head towards the decision, there is an argument that the production increase is being priced in somewhat by the market. Therefore, the outside of the knee-jerk moves down on the decision to increase the oil supply, depending on the sense of risk to follow.

30-Day FX Correlation to Oil

Crude oil price latest: Oil prices slip ahead of OPEC decision

Within days of the OPEC decision, It’s not uncommon for more original reports to make the rounds in news outlets and social media with #OOTT on Twitter for oil commentary. Therefore, it will be important to follow OPEC watchers on Twitter, such as Amena Bakr and Javier Blass, who are invaluable at these OPEC meetings.

On the technical front, near-term support lies at the 200DMA ($98.46), which Brent crude has not closed below since December 2021. At the same time, the asset also did not close below the level of $97.50, which marks the level at which the Russian invasion of Ukraine began. Likewise, if we see a close below $97.50, major technical damage is done opening the door towards the $90 handle. Meanwhile, on the upside, resistance is at $104.43 (weekly high) and $107.

Brent Crude Oil Chart: Daily Time Frame

Crude oil price latest: Oil prices slip ahead of OPEC decision

Source: Refinitiv

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