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OPEC+ Decision Supports Oil Quotes

10/12/2022 12:58 PM

The quotes of WTI Crude Oil continue a confident upward trend and are currently consolidated above the level of 86.00 after the decision of OPEC+ to reduce production by a record 2.0M barrels per day since November, as well as against the background of the imminent entry into force of the embargo on the sale of Russian "black gold" to the EU countries.

The members of the alliance, during the ministerial meeting held on October 5, adjusted the current plans, referring to the uncertainty of the prospects for the global economy, as well as the need to improve long-term forecasts for the energy market. Nevertheless, bidders consider this decision to be political. The US administration has already developed retaliatory steps aimed at reducing oil prices: the Ministry of Energy announced its intention to release the strategic reserve, if necessary, but it is impossible to do this on a permanent basis. In addition, the ban on marine energy supplies to the EU will begin to take effect from December 5, as a result of which the supply on the market will significantly decrease. The combination of these factors will become a powerful catalyst for accelerating the pace of global inflation and may lead to a recession in the global economy as early as 2023.

Against this background, a further increase in the quotations of WTI Crude Oil looks most likely, and its main target will be the 97.00 mark near the August maximum.

The long-term trend remains descending. At the moment, the price is trading in an upward correction, and last week buyers consolidated above the level of 86.00 with the prospect of developing a corrective growth near the level of 97.00, in the area of which the trend boundary passes. If this mark is held by sellers, then the price decline is likely to continue for several months.

Last week, the mid-term trend changed to an upward one. The bidders reached the target zone 2 (94.27–93.43), after which the price went into correction, the probable purpose of which is to test the key trend support in the area of 86.21–85.46, after which it is worth considering new long positions in the asset with a target at 93.43.

Resistance levels: 97.00, 103.15. | Support levels: 89.00, 86.00, 76.50.

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