OPEC’s global outlook report in brief after the price hike

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Crude Oil, OPEC Annual Global Oil Outlook, U.S. Supply and Demand – Talking Points

  • Crude oil prices have climbed the most since May amid rising US stimulus hopes
  • U.S. oil supply and demand down, all eyes on OPEC’s global oil outlook
  • WTI in a short term downtrend as key triangle resistance is held for now

WTI crude oil prices climbed 6.32% on Monday, the best performance in 24 hours since mid-May. Rising expectations for a fiscal stimulus in the United States likely boosted general market sentiment, providing support for the commodity linked to growth. It also follows a dismal performance by crude oil since the end of August amid growing difficulties over the outlook for energy demand.

In the chart below, a 14-day moving average of US oil demand and supply can be seen as a cautious downward trend since late July. Together, these are fundamental forces that can provide fairly neutral pricing. The country is the largest consumer and producer of the product, according to the EIA. Thus, the outlook for general growth and oil production in this country can greatly influence the price of crude oil.

What about on a global scale? The EIA also highlighted a continued supply and demand deficit during the fourth quarter. This could keep prices fairly stable. For a more in-depth analysis, check out the latest DailyFX Q4 forecast below. In the near term, in addition to US fiscal stimulus bets, all eyes this week are on OPEC’s latest Annual World Oil Outlook on Thursday.

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Crude Oil Supply and Demand Trends in the United States

Crude oil outlook: OPEC's global outlook report in brief after the price spike

The report will address both supply and demand projections through 2045. Following massive production cuts to stem a supply glut following the coronavirus outbreak, OPEC has slowly offset those cuts. . However, the pace has slowed down. Last month, the oil cartel averaged 24.43 million barrels per day, up from 24.39 in August.

If production levels remain around these levels for now, investors can focus on the demand side of the report. On that front, members can highlight what is expected to be a rapid recovery in 2021 that could improve the outlook for consumption. This in turn could increase crude oil prices. However, later this could fuel an increase in shale production in the United States, thus bringing back supply. For more, check out the fourth quarter oil outlook below.

Oil forecasts

Oil forecasts

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Crude Oil vs. OPEC Production

Crude oil outlook: OPEC's global outlook report in brief after the price spike

Technical analysis of crude oil

As WTI crude oil prices climbed on Monday, prices came to a halt before the downtrend line in late August. In fact, the product can continue to be marketed under a Symmetrical triangle highlighted below. Last week’s bearish breakout could signal a bearish path. Still, key support held between 36.15 and 37.10. A close below this range exposes the inflection point of 34.63.

WTI Crude Oil – Daily Chart

Crude oil outlook: OPEC's global outlook report in brief after the price spike

Crude oil chart created in TradingView

– Written by Daniel Doubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter



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