Market update: WTI oil slips as OPEC+ voluntary cuts fall short of convincing market sentiment

Oil prices surged today, nearing the critical $80 per barrel mark. Unexpectedly, the OPEC+ meeting triggered a sell-off instead.

OPEC+ voluntary cuts and Brazil to join

The OPEC+ meeting today presented a multitude of challenges, according to sources. Differing views prevailed as markets eagerly awaited a potential announcement on cuts.

The announcement arrived, confirming an agreement for voluntary cuts of approximately two million barrels per day in Q1 of the next year. Saudi Arabia extended its voluntary output cuts, with the virtual meeting failing to find an immediate solution. Eventually, members concurred on voluntary cuts, with Saudi, Kuwait, Russia, Algeria, and Kazakhstan expressing a commitment to gradually unwind these cuts post-Q1 2024.

Some of the cuts announced by OPEC+ members were 42k barrels/day from Oman, Iraq 220k barrels/day, UAE 163k barrels/day and then of course the extended cuts by Saudi Arabia and Russia leaving the total around 2.19 million barrels per day.

The last surprise that came out of the OPEC+ meeting was the invite to Brazil to join the group with the Brazilian energy minister saying he hoped to join by January.

Another concern for oil producer and the US came from EIA data today which showed that crude and petroleum products supply fell in September to 20.09 million barrels per day, which is the lowest since April. This could further fuel concerns of a global slowdown as we head into 2024.

Looking ahead

US data lies ahead and could have an impact on oil prices. Part of the decline today could be attributed to a stronger US dollar and rising yields, which had an impact on risk appetite.

Tomorrow, we have manufacturing PMI data as well as speeches by Fed policymakers, which get more interesting by the day. Today’s comments struck a more hawkish tone than we have heard over the past couple of days, and could also in part explain the rise in the US dollar.

Upcoming market events

Technical analysis

From a technical standpoint, WTI struggled to close above the 200-day MA today, despite spending considerable time trading above it. As noted earlier, WTI maintained a bearish structure, requiring a daily candle close above the $78.06 swing high for a structural shift and to empower the bulls.

As things stand, there is a real chance that oil could remain rangebound between the recent lows around the $73 mark, and the $78 a barrel handle. We are seeing a death cross pattern complete today as well with the 50-day MA crossing below the 100-day MA, which could embolden bears heading into the weekend.

Key levels to keep an eye on:

Support levels:

• 75.00
• 73.00
• 70.00

Resistance levels:

• 76.95
• 78.06
• 80 (psychological level)

WTI crude oil daily chart

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