WTI (New York Mercantile Exchange futures) has slowed its recovery ahead of the OPEC and its partners (OPEC+) summit, which begins at 1300 GMT on Thursday.
In the wake of the US Strategic Petroleum Release (SPR) and the approaching concerns regarding the Omicron COVID variety, the coalition is probably debating on the projected oil output increases, according to analysts.
US crude oil is dropping towards $66.00 at the time of this writing, after encountering solid opposition just below the $67 level earlier in the day.
WTI CHART Source: Tradingview.com
Observing the four-hour chart of WTI, the dark gold is swaying within a symmetrical triangular pattern, with the risks tilted to the downside notwithstanding the recovery in the price of crude oil.
The Relative Strength Index (RSI) has dipped slightly lower while remaining somewhere above the oversold region, supporting the notion that the market is headed lower in the near term.
During this time, WTI is facing strong offers near $68.30, which is the intersection of the negative 21-Simple Moving Average (SMA) and the declining trendline (triangle) barrier.
Because of this, until bears manage to break through resistance above the latter, bulls will continue to be optimistic, with the ascending trendline (triangle) stability at $64.94 likely to be threatened.
Unless a four-hourly candlestick closes below that demand level, the floor for a retake of the multi-month dips at $64.31 will be opened up for consideration.
The psychological level of $63.50 is expected to be the next drop target for WTI sellers shortly.
OPEC+ To Propose Halting January Oil Production Growth
Reuters revealed on Thursday that the Organization of the Petroleum Exporting Countries (OPEC) and its partners will likely consider suspending the oil output increase for January among their alternatives.
After the meeting on Thursday, OPEC+ will publish its supply policy. Crude oil prices are edging up slightly on Thursday morning as speculators begin to unwind their holdings ahead of the OPEC+ agreement on product strategy.
A barrel of West Texas Intermediate (WTI) crude oil is currently trading at $67.15 per barrel, up 2.2% from the previous day.
Oil Bearish Outlooks
Oil markets are projected to be oversaturated by the end of next year. Because most of the variables are short-term, the energy crisis should subside. Because of additional mobility constraints, it is possible that oil demand would not rebound.
The Delta is putting a strain on the energy industry. Stocks of dry bulk freight are increasing. New work-from-home models are being developed to reduce business and leisure air travel.
The transition to electric vehicles is expected to accelerate. Travel restrictions will stymie OPEC’s ambitions to increase output. Even with cutbacks, OPEC+ may fail to balance the market.
According to the IEA, vaccination is unlikely to save oil until well beyond the first half of 2021. And Libya increases output, whereas COVID reduces demand.