Crude oil prices finished yesterday’s trading slightly higher ahead of today’s US crude oil inventories report. WTI crude opened at $55.87 and dropped to an intraday low of $55.28. Then during the European session, crude oil prices staged a rally to finish the day at $56.21.
No Phase One Trade Deal Anytime Soon?
Initially, the commodity slid on risk aversion. US President Donald Trump announced yesterday that he is not in a hurry to strike a phase one deal with China. People close to negotiations say that the president is critical of details being discussed as he feels that the US might get the losing end of the deal. This raised concerns that the US may increase tariffs on Chinese goods on the deadline initially set on December 15.
Crude Oil Inventories Expected to Show a Shortage
For today, crude oil prices will likely be dictated by data from the US. The Energy Information Administration (EIA) is anticipated to report that there is a shortage in oil barrels in the US at 3:30 pm GMT. The market consensus is for a deficit of 1.6 million barrels in the week ending on November 29.
ISM Non-Manufacturing PMI on Tap
Prior to that report, the ISM non-manufacturing PMI will be released at 3:00 pm GMT. The forecast is at 54.5. Readings above the 50.0 baseline figure mean that the services industry is expanding. A better-than-expected reading could be bullish for the US dollar as it would affirm the Federal Reserve’s optimism on the economy.
OPEC to Announce Further Production Cuts?
It’s also important to note that the Organization of Petroleum Exporting Countries (OPEC) is having meetings this week. Market participants are widely expecting the organization to announce further rate cuts. The current agreement is for member nations as a whole to cut production by 1.2 million barrels per day. There are speculations that OPEC may announce further production cuts by 300,000 barrels per day. If this turns out to be true, we could see crude oil prices track higher in reaction to lower supply.
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Crude Oil Price Outlook
On the 4-hour chart, we can see that crude oil prices have fallen below the rising trend line (from connecting the lows of October 3, October 9, October 31, and November 20). In fact, the commodity now looks like any upward movement is limited by the previous trend line. A close below yesterday’s low could mean that crude oil prices may soon drop to $53.62 where the commodity bottomed on October 31. On the other hand, a bullish close above $56.72 may mean that crude oil prices could soon retest their monthly highs at $58.59.Download our latest quarterly market outlook for our longer-term trade ideas.
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