This week started with the talk of the United States banning Russian oil exports, so XBR/USD saw $130 a barrel. Then the ban became reality. What does it really mean for the market?
OPEC+ confirms supply hikes, WTI rises
OPEC+ had a teleconference on Tuesday and confirmed a positive global demand outlook. That allowed the cartel to proceed with their plan to gradually increase the oil supply by 2mln barrels per day over the next three months.
What was the immediate result?
The market saw that as positive news and an indication of the global oil demand recovery. Eventually, the WTI oil price spiked above $63 per barrel.
What are the long-term consequences?
OPEC+ is interested in a stable oil market. Although the decision was made not without inner discord in the cartel, Saudi Arabia would unlikely proceed with the supply increase if there was no solid ground for that plan. Hence, global observers can take that as a confirmation that things are really going better on a global scale - at least, as far as oil is concerned.
Therefore, upside movement may gain momentum.
- For the short-term, $64.30 is the possible target for bulls.
- For the mid-term, $67.85 should be expected to get challenged.
- In the long-term, if the prospects don't change and OPEC+ stays positive over the course of the next few months, $70 may become a new strategic objective for the oil price.
Organization of the Petroleum Exporting Countries (OPEC) is scheduled to meet on January 4.
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