What Next For Crude Oil Ahead of OPEC Meeting?

The price of crude oil has been in free fall since October. The price of Brent has dropped from a YTD high of $86 to a YTD low of $58.6. This decline has been caused by a number of factors. First, the impacts of the Iran’s exit to the oil market have been limited. This is mostly because of the waivers that the United States gave. Second, in anticipation of the Iran cuts, OPEC countries and Russia opened their tap and boosted their production. Third, in the United States, the supply has been increasing. In fact, data from EIA has shown an increase in US inventories. Fourth, there have been concerns about a slow economic growth for 2019 because of the ongoing trade conflict between the US and China.

In the coming year, there are concerns that the price of crude will continue to decline. This is after the United States ramps up its production. This year, the country has become the biggest oil producer, passing both Saudi Arabia and Russia. As more pipelines get completed in 2019, this may continue to put pressure on the oil market. In this week and the coming week’s OPEC meetings, the leaders of the countries could provide support to the price. Already, Saudi Arabia has talked about reducing the production.

There is also a likelihood that OPEC could continue to flood the oil market. They could do this to false bankruptcies in the US oil market. The last time OPEC did this, US oil producers were able to remain in business, boosted by low oil prices. As US rates rise, and as the price of crude falls, there is a likelihood that some companies will start going to bankruptcy. A recent report found that the debt in the oil market was more than $240 billion.

Today, the price of Brent crude oil rose by almost 1% as traders hoped that OPEC will cut its production. The moving averages continue to forecast more potential downward movements for the XBR/USD pair. The RSI has moved from the oversold territory and as of this writing is at 32. This week, the price will likely see a recovery, although it could be short lived.

The post What Next For Crude Oil Ahead of OPEC Meeting? appeared first on Forex.Info.

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