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OPEC + on Tap as prices fell below the major moving averages

Crude Oil, Omicron, OPEC, Technology Forecasting – Issues

  • oil Prices are put in the worst month of the year as countless factors drag emotions
  • OPEC You may choose to forgo the pre-planned increase in production within Omicron
  • TechnologyEven after falling below the 200-day SMA, the outlook remains bearish.

oil Prices collapsed in November and WTI and Brent benchmarks suffered the largest losses since March 2020. Crude oil fell more than 20% last month, and many of its weaknesses have occurred in the last two weeks. The new Omicron Covid stock has hit demand outlook after several countries have moved to block travel from South Africa. Prices have started to rise since December, but now there is a big hole to get out of.

Omicron news is probably at its worst time for oil bulls. Prices had already fallen in early November due to rumors that the United States is preparing to announce the release of shares from the Strategic Petroleum Reserve (SPR). The announcement followed shortly after coordinated efforts with other countries, including China and the United Kingdom.

OPEC and its ally OPEC + will meet this week to discuss whether to increase market supply by 400,000 barrels per day. However, given the recent development of Covid and the sharp drop in prices, cartels may choose a more cautious route. There is a risk that prices will fall further if you proceed with pre-planned price increases. Analysts expect the oil market to turn into the black next year as demand leveled off amid rising production.

Cartels need to carefully balance the proposed increase in production. On the one hand, OPEC members want to keep prices high by carefully adjusting supplies, but holding on to them risks sending prices close to $ 100 per barrel. It will probably fuel the US shale boom, but it will work against the group. On the other hand, if the supply is too loose, the tank price may drop. However, a cautious approach is most likely. Oil prices are unlikely to rise until health professionals better assess the current threat of Omicron.

Crude oil technology forecast

Prices are recovering today, but the technical outlook remains bearish given the recent breakdown. It violated the 200-day simple moving average (SMA) after WTI fell below the previous trend line. The RSI index showed that the price was out of the oversold state and the MACD was accelerating lower. So far, the outlook remains bearish while below the 200-day SMA.

Crude oil daily chart

Chart created in TradingView

— Written by Thomas Westwater, an analyst at DailyFX.com.

To contact Thomas, please use the comments section below or @FxWestwater on Twitter.



OPEC + on Tap as prices fell below the major moving averages

Source link OPEC + on Tap as prices fell below the major moving averages

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