How Much Higher Could WTI Go In The Short-Term?
Antonio Ferlito | Nov 27, 2020 11:02AM ET
Saudi Arabia and Russia have scheduled a conference call for Saturday, ahead of the OPEC+ meeting that will begin on Monday, Nov. 30.
The majority of observers expect the cartel to decide to keep current supply levels unchanged for a few months beyond the year-end deadline due to persistent uncertainty on the global demand side. However, the decision to do so is by no means a foregone conclusion, because of the opposition by Iraq, Nigeria and the disagreements with the United Arab Emirates.
The two main members of the organization, Russia's Deputy Prime Minister Alexander Novak and the Saudi Energy Minister Abdulaziz bin Salman, requested an informal videoconference with their counterparts from the Joint Ministerial Monitoring Committee, which includes Algeria, Kazakhstan, Iraq, Nigeria and the United Arab Emirates, according to a letter seen by Bloomberg.
The unscheduled meeting comes just two days before the OPEC meeting on Nov. 30, followed by the expanded OPEC+ meeting on Dec. 1.
Yesterday, Algeria's energy minister, Abdelmadjid Attar, who holds the rotating presidency of OPEC this year, told Bloomberg that caution is needed because the recent rise in oil prices could prove fragile. A separate meeting of an OPEC technical expert committee indicated that the data still indicate the risk of a new oil surplus early next year if the cartel and its allies decide to proceed with an increase in production of about 2 million barrels per day from Jan. 1, to 5.7 million barrels compared to the 7.7 million barrels per day currently in force.
Graphically, the short-term trend provided a powerful reversal signal with the decisive break-out of the discriminating threshold at 43.8 usd. At the moment though, the market failed to take out the recent highs.
We expect a continuation of the corrective movement towards the support area between 43.80 and 43.50 usd, respectively, the the highs from August and the weekly moving average. The retracement could represent an interesting buying opportunity.
In the opposite direction, the break-out above the 46.50 usd threshold would activate purchases on the strength, in view of an extension towards the 48.50 usd area (8% potential upside from current levels).
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