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    Oil Steady as Traders Await OPEC Report

    November 12, 2024

    Key points:

    • Oil prices steady as traders await OPEC’s monthly report for future price guidance.
    • Strengthening U.S. dollar pressures oil prices by raising costs for non-dollar buyers.

    Oil prices were largely unchanged in early trading on Tuesday, with Brent crude futures sitting at $71.82 a barrel, down 1 cent, and U.S. West Texas Intermediate (WTI) at $68.07, up 3 cents by 0158 GMT.

    The chart for CL-OIL-ECN shows a clear downtrend, with the price closing at 67.913 and continuing to slide from recent highs around 70.284.

    Picture: Crude oil under pressure as downtrend continues; key support at 67.85 in focus amidst demand concerns, as seen on the VT Markets app.

    The immediate support level appears around 67.850, which aligns with recent lows. Should this level fail to hold, it could open up further downside towards the next support near 67.00.

    The price would need to breach the 68.40 mark on the resistance side to signal any potential recovery or relief in selling pressure.

    This stability follows a turbulent two-day period where both contracts fell over 5%, driven by mounting oversupply concerns and tempered hopes for growth from China’s recent 10 trillion yuan ($1.40 trillion) debt package.

    Market participants were left unimpressed by China’s stimulus effort, which analysts feel lacks the scale needed to boost growth meaningfully.

    Traders are now eyeing the Organization of Petroleum Exporting Countries (OPEC) monthly report due out later today.

    The market will be particularly focused on any adjustments in OPEC’s demand forecast, especially through 2025. If the report signals further downward revisions in demand, it could add additional pressure on prices as the oversupply narrative strengthens.

    The physical oil market also appears better supplied in the near term. Analysts at ING noted a recent shift in prompt time spreads for Brent and WTI towards contango, a condition where prompt contracts are priced lower than future contracts.

    This contango structure typically suggests that immediate supply is outpacing demand, a factor likely to keep near-term price gains limited.

    Further adding to the headwinds for oil, the U.S. dollar has gained strength, closing higher on Monday as markets braced for upcoming U.S. inflation data and Federal Reserve commentary.

    A stronger dollar makes dollar-denominated commodities like oil more costly for holders of other currencies, dampening demand and weighing on prices.

    See also: Week Ahead: Market Digests Trump Trade Policies

    This contango structure typically suggests that immediate supply is outpacing demand, a factor likely to keep near-term price gains limited.

    Further adding to the headwinds for oil, the U.S. dollar has gained strength, closing higher on Monday as markets braced for upcoming U.S. inflation data and Federal Reserve commentary.

    A stronger dollar makes dollar-denominated commodities like oil more costly for holders of other currencies, dampening demand and weighing on prices.

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