Crude Oil: WTI, Brent Bounce as OPEC+ Uncertainty Persists

 | Nov 29, 2023 02:13AM ET

  • OPEC+ is struggling to reach an agreement to extend production cuts, leaving the oil market in flux.
  • Assuming we see an agreement this week, WTI and Brent prices could rally above $80 and $83 respectively.
  • While not the most likely scenario, a collapse in talks could take oil prices to multi-month lows.

    • The crude oil market is in flux. Of course, the outlook for every market is always uncertain, but the current backdrop for oil is particularly perplexing.

    Against a backdrop of falling prices and fears about demand next year, the Organization of the Petroleum Exporting Countries and allies led by Russia (OPEC+) were poised to meet last weekend and discuss the potential for production cuts. However, the group was forced to delay the meeting to this Thursday to allow more time to resolve disagreements over output levels for African producers.

    The signs of discontent extended this morning, with Reuters sources mentioning that the negotiations are difficult and that a further delay was possible, sending crude oil prices back below $75 despite general weakness in the US dollar.

    Ultimately, the OPEC+’s power derives from its ability to act as a single bloc, increasing or decreasing production in unison to manage prices, so we would expect the group to reach an agreement to extend (if not outright expand) its recent production cuts to support prices later this week or the next. That said, the tail risks of a failure to reach an agreement is on the rise, presenting an underappreciated potential for even more volatility in the oil market.

    h2 Crude Oil Technical Analysis – WTI Daily Chart