Oil Prices Forecast: Stagnate as OPEC+ Decision Looms, US Stockpiles Soar

Highlights

• Oil prices remain stable amid OPEC+ anticipation.
• Four-week price decline reflects demand concerns.
• U.S. crude inventories see major increase.

Oil Market Awaits OPEC+ Decision Amidst U.S. Stock Build-Up

In a low-key trading session before the U.S. Thanksgiving holiday, oil prices lingered in a tight band as traders anticipated key developments from OPEC+ and processed data on a significant increase in U.S. crude inventories. Brent crude futures nudged up to $82.59 a barrel, while U.S. West Texas Intermediate crude futures saw a modest rise to $77.90.

Four Weeks of Declines

The oil market has been under pressure, with both benchmarks recording four consecutive weeks of declines. The weakening prices reflect mounting concerns over demand prospects amid global economic slowdown fears. This cautious sentiment persists as the OPEC+ meeting approaches, where potential supply cuts are on the agenda.

OPEC+ Meeting in Focus

OPEC+, comprising the Organization of the Petroleum Exporting Countries and allied producers, is reportedly considering further supply cuts. Speculation about these cuts fueled a temporary 2% rise in oil contracts. Market analysts believe OPEC+ might extend or deepen these cuts into next year. Despite these potential actions, the International Energy Agency predicts a slight surplus in the global oil market by 2024.

U.S. Inventory Data

The focus on OPEC+ has somewhat overshadowed the substantial growth in U.S. crude stocks, which surged by nearly 9.1 million barrels. Conversely, gasoline and distillate inventories saw declines. The market eagerly awaits official government data on these stockpiles.

Short-Term Forecast: OPEC+ Dependent

In the short term, the market outlook appears bearish, influenced by the anticipation of the OPEC+ decision and the recent U.S. inventory build-up. The direction of future oil prices hinges significantly on the extent and nature of any supply adjustments agreed upon by OPEC+ members.

Technical Analysis

 

The current daily price of light crude oil futures at 77.70, marginally below its previous close of 77.77, indicates a stable market with minimal intraday movement.

It sits slightly above the minor support level of 77.43, suggesting some resilience, but remains below the 200-day moving average of 78.17, reflecting a potential longer-term downtrend. The price is considerably lower than the 50-day moving average of 84.21, highlighting a bearish sentiment in the medium term.

Given its position below both key moving averages and its proximity to minor support, the market sentiment leans towards bearish, with a cautious outlook on any immediate upside potential.