Oil Trade Below Russia’s Desire $55-65 Range Even As US Output Stalls

Oil prices remain little changed even as the Organization of the Petroleum Exporting Countries (OPEC) and its allies pledge to cut production by 1.2M b/d until the end of June, and crude may continue to consolidate even though Russia Minister of Energy, Alexander Novak¸ endorses a price range of $55-65 as it holds the monthly opening range.

Image of daily change for major financial markets

OIL TRADE BELOW RUSSIA’S DESIRE $55-65 RANGE EVEN AS US OUTPUT STALLS

Image of daily change for crude oil prices

OPEC’s 175th meeting appears to have stabilized crude prices as the group takes additional steps to rebalance the energy market, and oil may stage a more meaningful recovery over the near-term as the International Energy Agency (IEA) warns that the economic slowdown in Venezuela paired with the sanctions on Iran may lead to unintended consequences that would exacerbate the drop in global output.

(Click on image to enlarge)

Image of EIA weekly US field production of crude oil

At the same time, the most recent updates from the U.S. Energy Information Administration (EIA) show weekly production of crude narrowing for the first time since late-October, with the figure slipping to 11,600K from 11,700 in the week ending November 30.

With that said, signs of waning non-OPEC supply may also help to keep oil afloat, but the weakening outlook for the global economy may continue to produce headwinds for crude as OPEC’s Monthly Oil Market Report (MOMR) adamantly warns of slowing consumption in 2019.

Image of IG client sentiment for crude oil

Keep in mind, the IG Client Sentiment Report still shows 85.9% of traders are still net-long crude compared to 84.9% last week, with the ratio of traders long to short at 6.1 to 1. In fact, traders have been net-long since October 11 when oil traded near the $71.00 mark even though price has moved32.7% lower since then. The number of traders net-long is 3.2% higher than yesterday and 1.3% higher from last week, while the number of traders net-short is 2.1% lower than yesterday and 8.1% lower from last week.

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For more in-depth analysis, check out the Q4 Forecast for Oil

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