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Oil Price Fundamental Daily Forecast – WTI, Brent Edge Higher Ahead of OPEC+ Production Meeting

By:
James Hyerczyk
Updated: Oct 3, 2021, 17:57 UTC

The nearest month any increase could occur is November since OPEC+’s last meeting decided the October volumes.

WTI and Brent Crude Oil

In this article:

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished higher on Friday, closing slightly below a three-year high hit earlier in the week. The catalysts behind the move were a weaker U.S. Dollar and expectations that OPEC ministers will maintain a steady pace in raising supply.

On Friday, December WTI crude oil settled at $75.58, up $0.88 or +1.18% and December Brent crude oil ended the session at $79.28, up $0.97 or +1.22%.

US Dollar Slides for Second day, but Outlook Stays Upbeat

The dollar fell for a second straight session on Friday, trading declines in U.S. Treasury yields, as investors booked profits after recent sharp gains, though the decline was viewed as temporary.

For the week, the dollar index posted its largest percentage gain since late August, as investors looked to the Federal Reserve’s reduction of asset purchases in November and a possible rate hike late next year.

Earlier in the week, crude oil prices were pressured by a sharp rise in the U.S. Dollar. The move helped dampen foreign demand for the dollar denominated asset. Gains could be capped later in the year if the dollar continues to rise on tapering and rate hike expectations.

Traders Bracing for OPEC+ Production Decision

OPEC and its allies are scheduled to meet on Monday with the group expected to consider going beyond its existing deal to boost production by 400,000 barrels per day (bpd) when it meets on October 4, sources told Reuters.

At its last meeting in September, OPEC+ agreed to continue to adhere to its July decision to boost output by 400,000 bpd a month to phase out 5.8 million bpd in cuts.

Four OPEC+ sources said producers were considering adding more than that deal envisaged, but none gave details on how much more, or when supply would increase. Another OPEC+ source suggested an increase of 800,000 bpd for one month was possible, with zero the next month.

Baker Hughes Reports a Rise in US Oil Drilling Rigs for a Fourth Straight Week

U.S. energy firms last week added oil and natural gas rigs for a fourth week in a row as more storm-hit offshore units resumed service in the Gulf of Mexico/

Rigs rose by 7 to 528 in the week to October 1, the highest since April 2020, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Short-Term Outlook

The nearest month any increase could occur is November since OPEC+’s last meeting decided the October volumes. Nonetheless, investors will be keying on its production decision.

Prices could be pressured if OPEC and its allies decide to increase production to meet consumer demand. Prices are expected to remain firm if they decide to hold production at current levels.

For a look at all of today’s economic events, check out our economic calendar.

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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