Oil News: Will More Aggressive OPEC+ Supply Cuts Reverse the Bearish Trend?

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Updated: Dec 1, 2024, 02:20 GMT+00:00

Key Points:

Crude oil futures plunged 4.55% this week to $68. Will OPEC+ cuts and strong demand stabilize prices in December?
Resistance at $71.53 capped crude oil’s gains, pushing prices toward $66.53 support. Can OPEC+ prevent deeper losses?
Geopolitical stability reduced risk premiums, but Iran’s regional role keeps traders cautious. Will tensions reignite?
U.S. crude inventories fell 1.84M barrels, signaling demand strength, but gasoline stockpiles showed mixed consumption trends.
Oversupply fears persist as the IEA forecasts a surplus of 1M barrels per day by 2025, weighing on the long-term oil outlook.

Will Crude Oil Prices Rebound After a Sharp Weekly Decline?

Crude oil prices ended the week significantly lower, with Light Crude Oil futures settling at $68.00, down $3.24 or 4.55%. This steep decline reflects a bearish market tone, shaped by geopolitical developments, technical resistance, and demand uncertainties. This report examines the week’s key factors and provides a near-term market forecast.

Can Oil Prices Break Free from Technical Resistance?

Weekly Light Crude Oil Futures

Crude oil faced resistance at $71.53, the 50% retracement level, which has consistently capped upward movement throughout November. Following rejection at this level, prices fell below $69.11, a critical support, intensifying downside risks. The next key support levels are $66.53 and $63.36, while light holiday trading volumes amplified market vulnerability, limiting any meaningful upside.

Will Geopolitical Stability Keep Oil Markets Calm?

Geopolitical developments provided mixed signals to traders. A ceasefire between Israel and Hezbollah eased fears of supply disruptions, reducing the geopolitical risk premium in crude prices. However, risks tied to Iran’s regional role remain a concern. Meanwhile, the upcoming OPEC+ meeting on December 5 is highly anticipated. Analysts expect the group to extend production cuts, potentially supporting prices in the medium term. OPEC+ decisions will be critical in determining whether prices stabilize or face further bearish pressure.

Is Demand Recovery Strong Enough to Offset Bearish Sentiment?

U.S. crude inventories declined by 1.84 million barrels, signaling strong domestic demand. However, a surprising 3.3-million-barrel build in gasoline stocks revealed mixed demand signals in the U.S. market. In Asia, China and India showed robust crude demand, driven by stockpiling and high refinery throughput. These demand-side factors helped mitigate some bearish sentiment.

Will Oversupply Fears Dominate the Long-Term Outlook?

Long-term sentiment remains bearish as the International Energy Agency forecasts a surplus of over 1 million barrels per day by 2025, driven by increased global production. This outlook continues to weigh on prices, with analysts predicting limited upside despite potential short-term supply cuts.

Market Forecast

Crude oil prices are likely to test support levels around $66.53 to $63.36 in the short term, as bearish sentiment prevails. Geopolitical risks and potential OPEC+ production cuts could provide a floor for prices, limiting further losses. For a meaningful recovery, prices must breach $69.11 and key resistance at $71.53. Until clearer signals emerge, traders should prepare for continued volatility with a cautiously bearish outlook.

More Information in our Economic Calendar.

About the Author

James Hyerczykauthor

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.