empty
03.12.2024 09:16 AM
Oil on the Brink of a Scandal

Has oil found its fair value? Or is it hesitating to act ahead of the rescheduled OPEC+ meeting on December 5? The alliance, which controls about half of global crude oil production, reportedly plans to extend its production cut agreement until the end of the first quarter of 2025, according to four Reuters sources. Previously, the plan was to gradually phase out these commitments starting in December. However, revising this decision risks sparking a scandal.

Every major scandal starts the same way—someone says something. Often, this "something" is the truth. An OPEC+ official from Iran publicly stated what others feared to admit: the alliance is keeping oil prices too high, effectively subsidizing its competitors. This strategy of supply restrictions is leading to a rapid increase in production outside OPEC+, particularly in the U.S., fueling discontent. Angola has already left the alliance—who might be next? Gabon? Equatorial Guinea? Congo?

Oil Volatility Dynamics

This image is no longer relevant

What decision will OPEC+ announce on December 5? No one knows, and the markets are holding their breath. This will lead to reduced volatility and Brent consolidating in the lower part of its trading range at $71–$75 per barrel.

Bullish news for Brent comes from China, where business activity has reached a seven-month high, and from the breakdown of a 60-day ceasefire between Israel and Hezbollah. Attacks by the terrorist group triggered retaliatory strikes by Israel on Lebanon.

However, Brent faces pressure from the strong U.S. dollar, Saudi Arabia's decision to lower oil prices for its Asian buyers to a four-year low, and a rise in OPEC+ production in November to 27.02 million barrels per day (bpd). This marks the second consecutive monthly increase, with October's production exceeded by 120,000 bpd, primarily due to Libya resolving supply disruptions caused by a political crisis.

Oil and U.S. Dollar Dynamics

This image is no longer relevant

This image is no longer relevant

Investors are concerned that the Federal Reserve may not cut the federal funds rate in December, which could strengthen the U.S. dollar. In this context, FOMC member Christopher Waller's remarks that the current monetary policy remains tight and needs to be eased have provided fresh air for crude oil.

In my view, even if OPEC+ abandons plans to increase production, Brent bulls won't celebrate for long. The surge in business activity in China is a temporary phenomenon ahead of the implementation of U.S. tariffs. On the other hand, Donald Trump's intent to ramp up U.S. oil production is no laughing matter.

On Brent's daily chart, breaking out of the consolidation range of $71.0–$75.0 per barrel could lead to a resumption of the downtrend. An aggressive strategy would involve selling from $71.5.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

XAU/USD. Analysis and Forecast

Gold continues to rise as investors remain concerned about U.S. President Donald Trump's aggressive trade policy and its impact on the global economy. In addition, ongoing geopolitical tensions serve

Irina Yanina 13:22 2025-04-02 UTC+2

AUD/USD: Analysis and Forecast

Today, the AUD/USD pair is showing positive momentum, rebounding from nearly a four-week low. Support has come from the Reserve Bank of Australia's less "dovish" stance, with the central bank

Irina Yanina 12:25 2025-04-02 UTC+2

Markets May React to New U.S. Tariffs with Growth—But Under One Condition... (GBP/USD Downside and USD/CAD Upside Possible)

The day Donald Trump declared "Liberation Day" has arrived. Markets are bracing for the U.S. to introduce comprehensive and large-scale tariffs on its trade partners and potential retaliatory measures from

Pati Gani 09:51 2025-04-02 UTC+2

The Market Needs Proof

It's too late to be afraid. Rumors are circulating in the market that the White House may implement a universal 20% levy instead of reciprocal tariffs—pushing the average import duty

Marek Petkovich 09:16 2025-04-02 UTC+2

What to Pay Attention to on April 2? A Breakdown of Fundamental Events for Beginners

There will be very few macroeconomic events on Wednesday, but yesterday showed us that even a large number of macro reports do not always trigger significant movement—even within

Paolo Greco 06:25 2025-04-02 UTC+2

GBP/USD Pair Overview – April 2: The Pound Still Stuck in Place

The GBP/USD currency pair continues to trade in a flat range. On the 4-hour timeframe, this is a classic flat; on the lower timeframes, it looks more like a "swing."

Paolo Greco 05:14 2025-04-02 UTC+2

EUR/USD Pair Overview – April 2: The Dollar Gets Unlucky Again

The EUR/USD currency pair continued trading sluggishly and reluctantly on Tuesday. The market continued anticipating new tariffs from Donald Trump, even though the macroeconomic background was very strong yesterday. While

Paolo Greco 05:13 2025-04-02 UTC+2

Bitcoin caught in bull trap

The bottom shows no strength, the top has no desire. Even the so-called "smart money" is not rushing to buy Bitcoin, citing a confluence of negative factors. Tepid trading activity

Marek Petkovich 15:58 2025-04-01 UTC+2

USD/JPY. Analysis and Forecast

Today, the USD/JPY pair is struggling to benefit from a slight intraday upward movement, especially amid expectations that the Bank of Japan may raise interest rates at a faster pace

Irina Yanina 11:37 2025-04-01 UTC+2

US stock market: bad news fully priced in

The S&P 500 had its worst quarter in three years. Investors are shifting capital from North America to Europe. Once-booming US tech stocks have collapsed. Major banks and respected institutions

Marek Petkovich 09:13 2025-04-01 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.