Oil steady ahead of OPEC meeting

Traders take profit as OPEC+ meets to discuss 2021 production plans

Pre-meeting talks between a select few key OPEC+ ministers failed to generate a consensus on production plans for next year. This includes plans for January, when cuts had planned to be reduced by two million barrels, to 5.7 million. Those plans were put in place before the second wave hit and countries re-imposed heavy restrictions. Analysts expect that OPEC+ members will agree to extend oil cuts for another three months, which should buffer oil prices from any significant declines.

But with oil prices having bounced back following a triple whammy of vaccine successes, there may be more of a discussion to be had regarding delays to the changes. A more gradual phasing in may be deemed to be the best approach under the circumstances. Whether traders will be satisfied with that is another thing.

There’s a significant buffer in oil prices following the vaccine bounce and that may be why some nerves are creeping in ahead of the talks. After hitting their highest levels since March, crude prices have pulled back a little. A little profit taking perhaps in case producers capitalize on price moves to push ahead with planned increases. Brent and WTI are still finding support around USD47 and USD44.50, respectively – the summer highs – though, suggesting traders remain hopeful of a delay of some kind. A break below could be a bad signal near-term.

Despite it being an action-packed November, there’s still so much to come before the end of December, so there’ll be no coasting into the new year. This week it’s OPEC+, next week ECB, Fed the week after. The vaccine news has been great but it was one of many market risks in the coming weeks. Investors who are keeping an eye on oil prices can expect the final weeks of the year to be busy.

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

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Former Craig

Former Craig

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.