Oil News: OPEC Output Hike and U.S. GDP Report Loom Over Crude Outlook

Oil Prices Seek Stability as Traders Brace for U.S. GDP Report

Light crude oil prices saw a modest uptick on Wednesday as traders tried to establish support at $67.00 following Monday’s significant selloff. Prices remain capped by resistance at the $69.21 Fibonacci level and the 50-day moving average of $70.18, signaling ongoing technical challenges. On the downside, risks point to $65.75, and without a strong catalyst, oil prices may stay range-bound.

At 10:42 GMT, Light Crude Oil futures are trading $67.88, up $0.67 or +1.00%.

Supply Concerns Dampen Bullish Sentiment

After falling for two consecutive sessions, oil prices are hovering near one-month lows as the market weighs increased OPEC+ output and the possibility of easing geopolitical tensions. Recent reports indicate a potential diplomatic resolution between Israel and Hezbollah, which could reduce risk premiums tied to Middle Eastern conflicts. Israeli Prime Minister Benjamin Netanyahu is reportedly in discussions about a possible ceasefire in Lebanon, a development that may alleviate supply concerns linked to the region’s instability.

Meanwhile, OPEC+ is scheduled to boost production by 180,000 barrels per day in December, adding supply to a market already softened by demand concerns. Since early 2023, OPEC+ has reduced global output by 5.86 million barrels per day (bpd), or roughly 5.7% of global demand. However, the decision to scale up production in December may add pressure to a market that currently lacks significant bullish catalysts.

U.S. Crude Inventories Show Decline Amid Anticipated Data Release

U.S. crude and fuel stockpiles reportedly decreased last week, with sources indicating a 573,000-barrel decline in the week ending October 25, per American Petroleum Institute figures. In contrast, analysts had forecasted a 2.2 million-barrel build, making this smaller-than-expected drawdown a focal point for Wednesday’s market session. Official data from the U.S. Energy Information Administration, due later in the day, could provide further insight into inventory trends and influence price momentum. Traders expect it to show a 1.5M build.

China’s Demand Outlook and U.S. GDP Report in Focus

Demand signals from China remain mixed, as the country contemplates stimulus measures to bolster its struggling economy. Sources suggest China may soon approve the issuance of 10 trillion yuan ($1.4 trillion) in additional debt to fund economic recovery initiatives. This move, while sizable, underscores the tepid demand backdrop in China that has weighed on global crude markets.

Additionally, traders are eyeing the upcoming U.S. GDP report, set to release later on Wednesday. A strong report could lift oil prices, as it would signal healthy economic activity and potential upticks in fuel consumption. Any signs of a robust U.S. economic performance may provide temporary bullish support, with broader market movements hinging on global demand and geopolitical developments.

Market Forecast: Bearish Short-Term Outlook

Given the current lack of bullish catalysts and rising supply pressures, oil prices may struggle to sustain gains in the near term. Should the U.S. GDP report fall short of expectations or if OPEC+ supply growth outweighs demand improvements, prices are likely to test support around $67.00, with potential risk to $65.75. Overall, the near-term outlook leans bearish until stronger demand signals emerge.