FXEMPIRE
All

Oil Price Fundamental Daily Forecast – Down on Position-Squaring Following Last Week’s Whip-Saw Trade

Worries over the deal to extend the production cuts and Friday’s technical reversal to the downside are combining to put pressure on crude oil prices today. Last week’s whipsaw price action probably was a little excessive to the long side so we’re likely due for a short-term break into a value area.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading lower on Monday after posting a steady rise earlier in the session. In going through our checklist, we see the USD/JPY higher, Treasury yields rising and stocks firmer. Therefore, we have to conclude that the weakness in the crude oil market is not being generated by trade deal worries.

At 12:16 GMT, JanuaryWTI crude oil is  at $57.63, down $0.14 or -0.26% and January Brent crude oil is at $63.32, down $0.07 or -0.11%.

We suspect the weakness is being fueled by concerns over an extended cut in production by OPEC and its allies at their December 5-6 meeting in Vienna. This makes sense since there always seems to be uncertainty heading into this meeting.

OPEC+ Deal

Prices rallied to their highest level since late September on Thursday after Reuters reported that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by another three months to mid-2020 when they meet over December 5-6.

The group is expected to emphasize the need for stricter deal compliance from the likes of Iraq and Nigeria.

“A disciplined approach from Iraq and Nigeria should shave off another 300-400,000 barrel per day (bpd) from the group’s production level leading to a balanced market in the first half of 2020 and to a possible supply deficit in the second half,” said oil brokerage PVM.

The current agreement is for a production cut of 1.2 million bpd until the end of March.

Daily Forecast

Worries over the deal to extend the production cuts and Friday’s technical reversal to the downside are combining to put pressure on crude oil prices today. Last week’s whipsaw price action probably was a little excessive to the long side so we’re likely due for a short-term break into a value area.

Losses are likely to be underpinned by renewed optimism over a trade deal between the U.S. and China after President Trump said a deal is close and Chinese President Xi Jinping on Friday said his country wants to work out an initial trade deal.

However, there is still uncertainty over the deal since China is upset that the U.S. hasn’t agreed to rollback tariffs and Xi saying he has been trying to avoid a trade war but is not afraid to retaliate when necessary.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
IMPORTANT DISCLAIMERS
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
RISK DISCLAIMER
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.
FOLLOW US