Oil Prices on the Decline: OPEC+ Holds Firm

Stay informed on oil prices as OPEC+ maintains output cuts, impacting Brent and WTI prices. Explore the latest news on global oil markets and production cuts.

In a pivotal development for the global oil markets, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) have decided to uphold voluntary output cuts. Two OPEC sources, as reported by Reuters, revealed that the group plans to reconvene in March to deliberate on output levels for the second quarter. This announcement comes against declining oil prices since the notable spike observed on January 29th, where prices touched around $84 per barrel.

Increased output by non-OPEC oil-producing nations has counteracted the effectiveness of OPEC’s production cuts. Notably, the United States was leading in boosting oil supply, achieving record output levels in 2023. However, projections indicate a slowdown in US supply growth from 800,000 barrels per day last year to 300,000.

Brent Crude Oil Faces Weekly Decline

The UK’s Brent crude oil is on track for a significant weekly loss after marking a swing high earlier in the week. Contributing to this decline, the Federal Reserve and the Bank of England voted to maintain interest rates at restrictive levels, resulting in economic activity constraints. Further impacting sentiment, concerns about China’s mixed economic recovery have arisen as its manufacturing sector contracted for the fourth consecutive month. The local Chinese market, reflected by the SSE Composite Index, experienced a notable 8.75% decline overall this week, with a daily low of 4.7%.

Brent crude finds support from the 50-day simple moving average (SMA) after breaking below the 200-day SMA earlier in the week. Analysts point to the next support level, around $77, while resistance remains at the 200 SMA.

Oil Prices on the Decline: OPEC+ Holds Firm

WTI Oil Joins Decline with Support from 50-Day SMA

West Texas Intermediate (WTI) oil has also witnessed a substantial decline this week, mirroring the trend in Brent crude oil. Similar to Brent, WTI finds support from the 50-day SMA. If bearish sentiment continues, channel support is expected to come into focus around $72.50/$72.00, especially amid concerns about the uncertain growth story in China. Resistance for WTI is identified at the 200 SMA, aligning with the significant long-term level of $77.40.

Market Sentiment and Client Positions

82% of clients hold net long positions in the bearish market for Oil – US Crude. Daily changes in longs and shorts indicate a 9% increase in long positions, a 21% decrease in shorts, and a 2% change in open interest. Every week, longs have increased by 12%, shorts have decreased by 43%, and open interest has seen a 4% decline.

As global oil markets navigate these developments, market participants keenly observe the impact of geopolitical factors, production dynamics, and economic indicators on oil prices’ trajectory.

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