Crude oil prices closed higher in yesterday’s trading. WTI crude opened at $58.01 then traded lower to $57.52. Then, just before the day closed, crude oil prices rallied to $58.18. As of writing black gold gives up 0.10% at $58.05 per barrel.
With yesterday being Thanksgiving Day in the US, it was not surprising to see crude oil prices trade sideways. We are also unlikely to see much movement on the commodity until the much-anticipated OPEC (Organization of Petroleum Exporting Countries) meeting happens next week.
On December 5-6, OPEC and OPEC+ members will meet in Vienna. One of the top things on their agenda will be the discussion on whether or not they will cut back on crude oil production even further. As it stands, the current agreement is for members to reduce output by 1.2 million barrels per day.
The EIA weekly report showed an unexpected 1.572 million barrels rise in US crude oil stocks and also more than expected rise in gasoline and distillate stocks. US oil stocks have risen for the last five consecutive weeks and stand at the highest level since July 2019. Meanwhile, US crude production increased to a new record high level of 12.9 million barrels per day.
While Russian President Putin has said otherwise, there are still some speculations that Russia may not easily compromise to tougher crude oil production cuts. According to some reports, the country has not complied with the specified reductions mandated by an earlier deal. Other countries such as Iraq and Kazakhstan have also been producing more crude oil than they should.
It will be interesting to see how the OPEC meetings play out. Last time extensive oil production cuts were announced, WTI crude climbed from $42.00 to $66.00.
The commodity has been trading sideways since November 22 consolidating the recent gains. Any move to the downside has been limited to $57.11 and rallies have been capped at $58.58. These are going to be the two critical levels to watch as the meetings draw closer.
A bullish close above $58.58 could mean that crude oil prices are on their way up to test resistance at $60.80. This is where the commodity established highs in July 2019.
On the other hand, a close below $57.11 could mean that the commodity may drop to its yearly lows just below $51.00.Download our latest quarterly market outlookfor our longer-term trade ideas.
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