- OPEC+ extends oil production cuts, boosting Brent Crude prices above $75 per barrel.
- OPEC Secretary General expresses optimism about oil demand despite challenges.
- US Presidential election and potential geopolitical tensions add to market volatility.
- Technical analysis suggests Brent Crude faces resistance at $76.35, with support around $72.39.
Most Read: Markets Weekly Outlook – US Elections and Central Banks Lead the Way
Oil prices opened a $1 dollar higher following the weekend to trade at 73.80 a barrel when markets opened. Gain continued in both the Asian and early European sessions to reach a high of 75.30 before the US open.
On Sunday, OPEC+, which is made up of the Organization of the Petroleum Exporting Countries, Russia, and other partners, announced they would continue cutting oil production by 2.2 million barrels per day for December. They delayed increasing production from October due to lower prices and weak demand and this looks set to continue.
OPEC and Saudi Arabia have repeatedly said they do not target a certain price and make decisions based on market fundamentals and in the interest of balancing supply and demand. However, based on data and rumors it is more beneficial for OPEC countries to have a higher oil price which leads to higher profit margins. A low oil price at times weighs on OPEC countries as the costs involved continue to rise.
OPEC General Secretary Haitham Al Ghais said on Monday that OPEC is very positive on demand for Oil in both the short and long-term. This comes after OPEC have downgraded their recent forecasts slightly which is interesting. Al Ghais went on to say that there are a host of challenges facing the group and markets as a whole but it is not all bad. Al Ghais said that China growing 5% is not bad at all while the strength of the US economy is another positive.
The week ahead could be a very volatile one when it comes to Oil prices. There are all the data releases together with Central Bank meetings, US elections and of course a potential strike by Iran on Israel. Also, a potential victory for Donald Trump in the US election could see Oil prices rise as rumors persist that Trump may sanction a potential attack on Iranian nuclear facilities. Something to bear in mind as election results come through.
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Technical Analysis
From a technical perspective, Oil prices gapped higher for the second consecutive week. Concerns around Geopolitics and this week’s OPEC decision were the main reasons driving this jump in Oil prices.
It will be interesting to see how markets gauge the impact of the US Presidential Elections, especially if Donald Trump wins. As things stand, Oil prices face a significant hurdle at 76.35 if the recovery is going to continue.
A move beyond the 76.35 handle opens up a run toward the 100-day MA around the 79.00 handle and then of course the psychological 80.00 a barrel mark.
Currently, the daily candle is showing signs of bearish pressure having retreated from the daily high around 75.77 to trade at 75.06 a barrel. Further downside and a bearish daily candle close could open up a retest of support at 72.39 and the most recent swing lows around 71.00.
Brent Crude Oil Daily Chart, November 4, 2024
Source: TradingView (click to enlarge)
Support
- 72.39
- 71.00
- 70.00 (psychological level)
Resistance
- 76.35
- 79.00
- 80.00
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Zain Vawda
He has spent the last 3 years in an analyst role honing his skills across various financial domains, including technical analysis, economic data interpretation, price action strategies, and analyzing the geopolitical impacts on global markets. Currently, Zain is advancing in obtaining his Capital Markets & Security Analyst (CMSA) designation through the Corporate Finance Institute (CFI), where he has completed modules in fixed income fundamentals, portfolio management fundamentals, equity market fundamentals, introduction to capital markets, and derivative fundamentals.
He is also a regular guest on radio and television programs in South Africa, providing insight into global markets and the economy. Additionally, he has contributed to the development of a financial markets course approved by BankSeta (Banking Sector Education and Training Authority) at NQF level 6 in South Africa.
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