Oil Prices Steady as Saudi Arabia Denied Report of Production Hikes

  • USOil
    (${instrument.percentChange}%)

USOIL Analysis

The Wall Street Journal reported on Monday that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, are considering production boost of up to 500,000 barrels/day, ahead of their December 4 meeting. [1]

However, Saudi Energy Minister, Prince Abdulaziz bin Salman denied the report according to state news agency SPA, saying that the "current cut of 2 million barrels per day by OPEC+ continues until the end of 2023". [2]

Meanwhile markets are worried about the Covid-19 situation in China, as infections are on the rise recently. Furthermore, the world's second largest economy and second biggest consumer of oil, reported its first Covid deaths in months, over the last few days. [3]

Fears over demand have weighed on oil prices, with USOil coming from its second straight losing week. The WSJ report sparked a sharp drop, which was quickly reversed after the Saudi denial though, leading to a volatile day with two-way action.

This keeps risk for fresh 2022 lows (74.26) active, but sustained weakness below 200Weeks EMA around the broader 72.00 region, does not look easy at this stage.

On the other, USOil defended the 2022 lows on Monday, avoided a negative daily close and steadies today. Furthermore, OPEC+ had recently sent a strong signal with its massive production cut, while the new comments from the Saudi Energy minister show commitment to support prices.

As such, a rebound towards the EMA200 (at around 86.00) could be in the cards, but the commodity does not inspire confidence at this stage, for a broader recovery that would bring the November highs (93.76) in its crosshairs.

Nikos Tzabouras

Senior Market Specialist

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 22 Nov 2022 https://www.wsj.com/articles/saudi-arabia-eyes-opec-production-increase-ahead-of-embargo-price-cap-on-russian-oil-11669040336

2

Retrieved 22 Nov 2022 https://www.spa.gov.sa/viewfullstory.php

3

Retrieved 30 Nov 2022 https://english.www.gov.cn/statecouncil/ministries/202211/22/content_WS637c3e83c6d0a757729e3866.html

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