Oil News: Crude Prices Rise as OPEC+ Delays Output Hike Amid Demand Concerns

Light Crude Futures Rise on OPEC+ Production Delay and Technical Support

Light crude oil futures moved higher Monday, bolstered by a recent technical milestone as prices held above the 50-day moving average of $70.10. After a Friday rally that briefly pushed oil above this level, momentum slowed into the close, and traders now aim to regain momentum for a sustained advance. The next technical target for traders is the 50% retracement level at $71.63, followed by the long-term 200-day moving average at $73.11, which would confirm an intermediate uptrend.

At 10:58 GMT, Light Crude Oil futures are trading $71.22, up $1.73 or +2.49%.

OPEC+ Delays Planned Output Increase

Oil gained over 2% following the weekend announcement that OPEC+ will delay a planned production increase by one month, citing fragile demand and recent price declines. Initially scheduled to raise output by 180,000 barrels per day (bpd) in December, the coalition, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other allies, opted to extend current cuts of 2.2 million bpd into December. This production cap was already extended from October to support prices.

UBS analyst Giovanni Staunovo indicated that OPEC+ wants clearer signs of economic recovery, noting, “The group is waiting for the effects of recent U.S. rate cuts and China’s economic stimulus.” He added that OPEC+ is also factoring in potential political shifts, as the U.S. presidential election could alter economic policy, while producers who previously overshot quotas are also expected to cut production.

Geopolitical Tensions and Key Events Ahead

Last week, both Brent and West Texas Intermediate (WTI) crude posted declines of 4% and 3%, respectively, pressured by record U.S. production. However, oil prices found support late Friday following reports of potential retaliatory action by Iran against Israel. News from Axios suggested Israeli intelligence believes an Iranian strike could occur from Iraq soon, creating additional geopolitical uncertainty in energy markets.

Looking further into the week, Tuesday’s U.S. presidential election, which shows a close race between Kamala Harris and Donald Trump, could significantly impact market sentiment. Meanwhile, the Federal Reserve is expected to announce a 25 basis-point rate cut Thursday, a move that could influence demand projections by easing borrowing conditions.

China’s Economic Stimulus Measures

China’s Standing Committee of the National People’s Congress is meeting this week to discuss additional economic stimulus aimed at stabilizing its economy. Analysts expect measures to address local government debt, but broader support for demand may emerge, potentially lifting oil demand prospects. China’s economic decisions are closely watched by oil traders as the country remains a major consumer of crude.

Market Forecast: Bullish Near-Term Outlook

The alignment of technical indicators and OPEC+’s delay in increasing supply suggests a bullish short-term outlook for crude oil, with price momentum likely sustained by support levels and the anticipated 200-day moving average target of $73.11.

However, potential volatility remains high, influenced by geopolitical tensions, U.S. election results, and Fed rate decisions. If resistance at $71.63 is overcome, further gains are expected, though cautious sentiment may persist in response to any escalations in Middle Eastern geopolitical risk.