Oil prices surged as positive factory output data from China and ongoing unrest in the Middle East drove market momentum. The upcoming OPEC+ meeting is anticipated to lead to a postponement of production cuts for the next year, underscoring the delicate balance between market support and maintaining market share.
Market participants are bracing for OPEC+ to defer a production hike, with oil prices trading in a tight range influenced by geopolitical developments and the economic landscape in China. The market received a boost after US President-elect Donald Trump warned BRICS nations against introducing an alternative currency, while the Middle East witnessed a ceasefire between Israel and Hezbollah, along with Tehran’s commitment to assist Syria’s government.
From a technical standpoint, oil prices have been consolidating in a triangular pattern for the past four months and are approaching a potential breakout. The Stochastic indicator suggests a bullish rebound is possible in the near term, with a likely retest of the upper boundary of the triangle.
Conversely, the 50-day moving average is trending below the 100-day moving average, confirming the prevailing bearish trend in the market. The contraction of Bollinger bands indicates decreasing volatility in the oil market.