OPEC+ meeting preview: crude primed for big breakout
Oil prices are primed for another sharp move this week, with the OPEC+ meeting looking to potentially set a new precedent for a globalised price manipulation push.
Saudi Arabia and US switch roles
Crude oil has seen a huge rise in volatility of late, with US President Donald Trump helping to spark an extreme surge in prices at the prospect of an impending production cut between the Organisation of the Petroleum Exporting Countries (OPEC) and Russia. The initial breakdown in relations between Saudi Arabia and Russia over a 1.5 million barrels per day (bpd) production cut ultimately saw both sides ramp up output in a war of oil prices. This led to a curious situation where the normally supportive Saudi Arabians were driving oil prices down to a point where US producers were completely undercut.
This impact on US producers simultaneously flipped Donald Trump’s position from seeking lower oil prices to desperately intervening to drive them up once again.
There is no doubt that everyone involved in the supply of oil would prefer prices to be higher than they currently are. However, we are finally seeing an end to the environment where global producers benefit from the elevated prices caused by OPEC+ actions. With that in mind, the meeting between OPEC and G20 nations this week will likely provide a significant amount of volatility given that it will provide markets with an idea over whether we will move into an environment where price manipulation is undertaken by Western oil producers alongside OPEC.
What to watch for at OPEC+/G20 meeting
The first thing traders will be keen to see is whether a deal has been agreed, which is far from guaranteed. Despite talk of a verbal deal between Russia and Saudi Arabia, the key element that could drive Russian involvement is the ability to drive down output in the US. Given the independent nature of US oil production, this could mean including major drilling companies in discussions.
The second most important element to watch out for will be the size of any agreed cut, with Donald Trump’s claim of a potential 15 million bpd cut setting a high bar to overcome. With crude having spiked sharply on the prospect of a 10 million-15 million bpd cut, anything below this level would be deemed a failure.
Brent turning higher from key support
The Brent chart below shows how we have seen wide 6% swings throughout the week, as price respects a $32.34-$34.52 range. That looks likely to hold for now, with price starting to turn higher from the lower echelons of that range. This range is going to be a clear-cut zone which needs to be broken to provide a fresh directional bias.
More specifically, a breakout from this zone in reaction to the OPEC+ announcement would carry more weight in signaling where we go from here.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
React to volatility on commodity markets
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
See opportunity on a commodity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a commodity?
Don’t miss your chance. Upgrade to a live account to take advantage.
- Analyse and deal seamlessly on fast, intuitive charts
- Get spreads from just 0.3 points on Spot Gold
- See and react to breaking news in-platform
See opportunity on a commodity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
