2020-12-01 • Updated
Investors are waiting for the significant decision of OPEC+ members to prolong oil output cuts or stop them. Yesterday, they failed to come to a common conclusion. That pushed oil prices down below $45.00. However, the market euphoria over having a vaccine soon drove riskier assets upward as well as oil.
OPEC+ will meet the next time on Thursday to discuss the oil supply’s regulations. According to RBC Capital Markets, OPEC+ should agree on further cuts for about 3 months. On the one hand, the virus is still a severe problem, which has strong pressure on oil demand. On the other hand, the recent Chinese Manufacturing PMI report was better than expected and signaled the industry expansion. China is a huge oil importer, that’s why a recovery of the economic activity there will increase the oil demand, which should underpin oil prices in the end.
WTI oil is trading sideways from $44.65 to $45.65. If it manages to break the top of this range, the way up to the high of November 26 at $46.00 will be clear. On the flip side, the move below the support of $45.00 will drive crude oil to yesterday’s low of $44.65. However, it’s likely to pull back from $45.00 and turn to the upside to continue its zig-zag movement.
To trade WTI oil with FBS you need WTI-21F, which expires on December 18.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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