Yahoo Finance WTI Oil At Crossroads As Traders Wait For The Next Move From OPEC+
Traders Wait For OPEC+ Decision And Monitor Coronavirus Data From Europe
It’s been an eventful week for the oil market. U.S. has announced its decision to release 50 million barrels from the Strategic Petroleum Reserve in order to put pressure on prices, but the market reacted with an upside move. WTI oil received support near the $75 level and bounced back above the $78 level.
Now, the focus shifts to OPEC+, which is scheduled to meet at the beginning of December to discuss its policy. Currently, the group plans to add 400,000 barrels per day (bpd) each month.
However, recent reports suggest that Saudi Arabia and Russia may be willing to take a pause in order to provide additional support to the market. If fact, it looks that Russia is interested in keeping current production levels intact as it may have problems with boosting output in winter months.
Just like many other producers, Russian companies have cut spending during the recent crisis, and they may be forced to drill more if OPEC+ continues to increase production as planned. Winter is usually harsh in Russian oil-producing regions, which raises costs and increases technological difficulty, so Russia may be in no hurry to boost production.
As for Saudi Arabia, the kingdom has put a lot of effort in keeping OPEC as a relevant organization whose decisions have a material impact on the market. In this light, Saudi Arabia may feel pressed to make a move. The U.S. failed to impress traders with its move as the market expected that oil consumers will be ready to push about 100 million barrels to the market. In case OPEC+ decides that it will not raise production for the next few months, the oil market will get additional support.
There is also another important catalyst which should be closely monitored. Recent data shows that Europe is facing a powerful wave of coronavirus despite relatively high vaccination rates in EU countries. Austria has already announced a full national lockdown, and Slovakia followed its example with a two-week lockdown. At this point, these lockdowns had minor impact on the oil market, but traders will continue to closely monitor the developments in Germany and France. If Germany, which has just reported another record number of new cases, announces a lockdown, the oil market will find itself under pressure.
Technical Analysis
WTI oil is currently trying to settle above the 50 EMA which is located near $78.50. WTI oil has already made several attempts to settle above this level, but failed to develop sufficient upside momentum.
In case WTI oil manages to settle above the 50 EMA, it will head towards the next resistance level which is located at the 20 EMA near $79.50. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.
If WTI oil gets above the 20 EMA, it will move towards the resistance at $80.80. A successful test of this level will open the way to the test of the resistance at $81.80.
On the support side, WTI oil needs to stay below the 50 EMA to have a chance to develop downside momentum in the near term. The nearest material support level for WTI oil is located at the $77 level. If WTI oil declines below this level, it will move towards the next support at $75.50. A successful test of this support level will push WTI oil towards the support at the recent lows at $74.80.
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This article was originally posted on FX Empire
