WTI Crude Oil Forecast: OPEC+ Meeting and Technical Levels

WTI Crude Oil Forecast: OPEC+ Meeting and Technical Levels

Fundamentals:

OPEC+ talks starts on Jan 4th. According to Bloomberg, Russia intends to support a further increase in OPEC+ production at the group’s meeting next month, even as a new strain of the coronavirus raises concerns about demand, said officials familiar with the country’s oil policy.

As of now, Moscow believes it makes sense to raise output from the Organization of Petroleum Exporting Countries and its allies by 500,000 barrels a day in February, matching the hike already agreed for January, the officials said, asking not to be named because the information is confidential.

That would be the maximum supply increase allowed by the accord that emerged from the cartel’s difficult talks in early December. Other members would need to agree for the output expansion to go ahead.

OPEC+ has shifted to a monthly schedule of meetings, so it can react more rapidly to changes in the market, and make more gradual production adjustments that are better suited to a volatile situation.

The sudden emergence of a faster-spreading variant of Covid-19 in Europe has undermined a wave of economic optimism caused by the discovery of several vaccines. Yet Russia’s current position indicates the nation expects the market to be able to absorb additional OPEC+ supply.

Global oil demand is recovering slower than expected and may take as long as two or three years to reach pre-pandemic levels, Russia’s Deputy Prime Minister Alexander Novak said at an online energy forum Monday.

The oil-price decline driven by the lockdown across the southeast of the U.K. and concerns over the new coronavirus strain show just how volatile the market still is, he added.

Still, Russia sees the need to gradually increase crude output as global demand recovers, “without disrupting the market balance and without creating a surplus,” Novak said. “For oil-exporting countries, this is clearly an important thing.”

Summary: Mr. Putin seems less eager for higher Oil Prices at the time being.

Technically: ( 4H Chart ) 

Cycle Sniper’s SET1 Sell Signal at 49.22. Now we see a bearish divergence as well. A firm breakout of zero line will trigger the bearish move.

Breakout Sniper 30 Period is ready to send sell signal.

Intraday Horizontal Support is 47.66 ( MM 2/8 ).  Bearish pressure will be accelerated by the breakdown of the support. Near term, targets are 47.22 46.80 46.10. However, if Russia insists on increasing the supply, we may see Oil Prices falling down to 43.75 and 41.50.

On the upside, we have a bearish Butterfly Pattern forming as seen on the headline chart. 50.20 -50.50 zone can be used as a selling opportunity.

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