Oil Prices Fall by 0.7% Threatening to Drop Below $70 – OPEC+ Steps in to Stabilize Market
In a recent turn of events, the price of a barrel of oil saw a 0.7% decrease, raising concerns of it falling below the $70 mark. However, OPEC+ took action to prevent this scenario by postponing the ‘voluntary’ production increase by key members for another quarter.
Experts believe that the unity within the cartel is crucial to maintaining stability in oil prices. Any signs of discord among members could lead to a sharp decline in prices, creating challenges for major producers who risk losing market share, especially to the US.
Meanwhile, US oil production reached a record high of 13.63 million barrels per day last week, showcasing increased efficiency despite a lower number of operating rigs compared to previous years.
Reclaiming market share from the US poses a significant challenge for OPEC+, prompting speculations about a potential managed decline strategy. The price of oil remains a key indicator to watch for insights into the future direction of the market.
Recent trends in WTI crude oil prices indicate a struggle to break above the 50-day moving average around $70, with support levels holding strong at $67. The bearish trend since the second half of 2021 is yet to be reversed, as the price continues to trade below key moving averages.
As the year comes to a close, traders may engage in tax-related selling, potentially reinforcing the downtrend. However, a break below key support levels could trigger a broader market sell-off, while a bounce back from cycle lows could signal a possible uptrend in the coming year.
The FxPro Analyst Team