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Brent Crude – Volatile start for oil ahead of OPEC+ meeting

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  • PMIs continue to point to a weakness in demand
  • OPEC+ holds the key to crude oil prices
  • Lost momentum ahead of recent decline

It’s been a volatile start to the week for oil, with prices initially rising before falling negative to trade almost 2% lower on the day.

We’ve had a vast selection of PMIs to bear in mind today, as well as speculation around the OPEC+ decision on Wednesday and, of course, the US averted a government shutdown.

I’m not sure all of this is a net negative for oil, per se, but it was trading at very high levels prior to this and had already started to lose momentum so perhaps what we’re seeing is a case of profit-taking. Especially given the proximity to the OPEC+ meeting on Wednesday.

BCOUSD Daily

Source – OANDA on Trading View

The recent decline in BCOUSD came following a rally and new high that failed to be backed up by stronger momentum and now it appears to have potentially moved into a corrective phase.

A divergence often isn’t followed by such a sudden corrective move and this may also quickly reverse higher again but the moves over the last few days are not small.

The price is now testing last week’s lows and a break below may point to further declines, with support in the $88-$90 region potentially key.

Ultimately, though, the OPEC+ decision on Wednesday may dictate the direction of travel.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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