By Camilo Botia
Brent Oil keeps trading lower and is set to close November with losses, trying to break below $80, while OPEC+ is expected to meet next Thursday to decide whether oil production will be reduced once more.
Oil prices have lost significant momentum after peaking in September at around $95 per barrel, losing more than 16% in the last two months and breaking below the 200-day moving average, a significant technical indicator for Brent. Lower oil prices have benefited countries worldwide, easing pressure on price levels and causing a reduction of inflation in some countries; however, OPEC+ is looking at deepening oil production cuts amid a quota disagreement between some producers.
Several analysts have said they expect OPEC+ to extend or even deepen supply cuts into next year to support prices in Thursday’s meeting, a meeting delayed from Nov. 26, supposedly because of a disagreement over output levels for African producers. Saudi Arabia, the OPEC+ leader in production, has been making a largely unilateral supply cutback of 1 million barrels a day since July and, as a result of the two-month decrease in prices, is now seeking more support from other OPEC+ members to stabilize the price above $80.
How does this affect the price?
The price has a significant downtrend, as shown by the ADX indicator, which is trading at 33, signalling that the current bearish trend remains strong, which has taken place since September and now has Brent 16% below its peak for 2023. The price is also trading below its 200-day moving average of $82.15 and has been resisting two breaking attempts around mid-November. If the bearish pressure remains and OPEC+ output reduction does not counter the pressure on prices, Brent could break below $80 and trade between $78 and $72.
On the other hand, if OPEC+ cuts significantly impact supply, the price could keep trading above $80 and eventually test again and break above the 200-day moving average, with $87 as a significant resistance in the near future.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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