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Crude Oil News Today: OPEC+ Cuts Could Sustain $80+ Barrel Prices

By:
James Hyerczyk
Updated: Mar 1, 2024, 13:33 UTC

Key Points:

  • Oil futures trade higher, influenced by supply-demand dynamics.
  • Potential OPEC+ extension and U.S. inventory rise impact prices.
  • Market eyes OPEC+ decision, U.S. economic indicators closely.
Crude Oil News Today

In this article:

Strong Daily/Weekly Performance

Crude oil prices are trading higher on Friday and for the week. This movement is underpinned by a complex interplay of supply and demand factors in the global market. As traders assess these elements, the anticipation of decisions by major oil-producing countries and economic data releases play a crucial role in shaping the market’s direction.

At 11:14 GMT, Light Crude Oil Futures are trading $79.09, up $0.83 or +1.06%.

Supply Factors

The oil market this week has been significantly influenced by supply-side considerations. One of the most critical elements is the potential extension of supply cuts by Saudi-led OPEC+. There’s increasing speculation that these cuts, originally planned for the first quarter, may extend until the end of 2024. This move, if confirmed, could act as a significant price support, maintaining oil prices above $80 a barrel. However, the final decision on these cuts is anticipated in the first week of March, with individual country announcements to follow.

On the other hand, a recent survey showed that OPEC’s production in February increased by 90,000 barrels per day (bpd) compared to January, reaching 26.42 million bpd. This uptick in output suggests a slightly relaxed supply situation, which might counterbalance the bullish sentiment driven by the expected OPEC+ cuts.

Moreover, U.S. crude oil inventories have witnessed a consistent rise, adding another layer of complexity to the supply scenario. This week’s inventory build was notably higher than forecasts, pointing towards a potential oversupply in the market.

Demand Factors

Demand-side factors are equally pivotal in shaping the oil market trajectory. Notably, the Chinese manufacturing sector’s contraction for the fifth consecutive month indicates a potential slowdown in one of the world’s largest oil consumers. Such a trend could dampen oil demand, exerting downward pressure on prices.

Conversely, in the United States, the personal consumption expenditures (PCE) index for January suggested inflation rates in line with economists’ expectations. This has reinforced market expectations of a potential interest rate cut by the Federal Reserve in June. A rate cut could stimulate economic activity, potentially bolstering oil demand.

Short-term Market Forecast

Considering the current supply and demand trends, the short-term outlook for oil prices appears bullish. The anticipation of extended OPEC+ supply cuts, coupled with stable demand indicators from the U.S., suggests that prices might maintain their upward trend. However, traders should remain cautious and attentive to the upcoming OPEC+ decision and any new economic data, which could swiftly alter market sentiments.

Technical Analysis

Daily Light Crude Oil Futures

Light crude oil futures are higher on Friday as speculators attempt to build on their positions above the 200-day moving average at $76.61.

With the intermediate and long-term trends trading higher,  the market remains poised for a short-term breakout above the November 14 high at $79.87. This price is a potential trigger point for an acceleration to the upside with the next major target coming in at $82.68.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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