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The OPEC+ Meeting will Determine the Pricing Direction

9/1/2022 2:48 PM

This week, WTI Crude Oil quotes resumed their decline, losing positions gained a week earlier, and are now in the 89.00 area.

Pressure on the oil market is exerted by fears of a global economic downturn, which could reduce oil demand. The main driver of the decline was Chinese macroeconomic statistics: Manufacturing PMI has been declining for the second month in a row, reaching 49.4 points in August, while activity in the service sector is still increasing, amounting to 52.6 points, but its growth rate is slowing down. Also, investors are alarmed by introducing new quarantine measures in the Shenzhen province, where several large-scale industries are concentrated, which could negatively affect the oil demand. Against this background, the data of the report of the Energy Information Administration of the US Department of Energy (EIA) could not provide serious support to quotations. However, oil reserves in the United States fell by 3.326M barrels, gasoline stocks – by 1.172M barrels, and only distillate stocks increased by 0.111M barrels.

However, the current decline in asset quotes may not be long-lived if OPEC+ exporters fulfill their plans to reduce production volumes. The possibility was hinted at last week by Saudi Energy Minister Prince Abdulaziz bin Salman, who other cartel members and his allies supported. The organization's meeting should take place next week, and then the issue of reducing production can be discussed more specifically. Also to the fear of a global economic downturn, exporters may be pushed to such a decision by the latest data from cartel analysts, according to which this year the energy market expects a production surplus of 0.4M barrels per day.

The trading instrument is close to 87.50 (Fibonacci correction 61.8%, Murrey [2/8]), a breakdown of which allows a decline to 81.25 (Murrey [1/8]), 75.00 (Murrey [0/8]). The key "bullish" level is 93.75 (Murrey [3/8]), supported by the middle line of Bollinger Bands, consolidation above which allows growth to the area of ​​100.00 (Murrey [4/8]), 106.25 (Murrey [5/8]).

Technical indicators reflect a continuation of the decline: Bollinger bands are horizontal, Stochastic is pointing downwards, and the MACD histogram grows in the negative zone.

Resistance levels: 93.75, 100.00, 106.25. | Support levels: 87.50, 81.25, 75.00.

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