The OPEC + meetings are scheduled to begin on Friday, even as crude oil prices staged a recovery which enabled WTI crude to pare some of last Friday’s losses.
Crude oil prices got a boost today from China’s key PMI data. The Caixin Manufacturing PMI was expected to have dropped from last month’s figure of 51.7, but instead came in at 51.8, which also beat market estimates of 51.5. The upbeat data as well as expectations that OPEC may maintain the production limits set some time ago helped crude oil prices gather some upside momentum on Monday.
Adding to the upbeat price moves for today was key data from Russia’s Central Dispatching Department of Fuel Energy Complex, which reported a decrease in Russia’s crude oil exports to 20.916 million tonnes, equivalent to an annualized 4.2% drop in November 2019.
Crude Oil Prices and the OPEC + Meetings
A key point to be raised in the OPEC + meetings is the poor compliance with assigned quota cuts by OPEC members and also by non-OPEC member and key Saudi ally, Russia. Russia has for the most part of the year, continued to pump beyond assigned quotas. The Saudis have had to compensate for this overproduction by reducing its output by almost 700,000 barrels per day. However, Saudi Arabia’s new energy minister Prince Abdulaziz bin Salman has indicated that the country would no longer tolerate the situation. He is likely to press errant members on the issue during the meetings.
So far, WTI crude oil price is up, but continues to trade within the ascending channel formation on the daily chart. Today’s price surge bounced off the channel’s trendline (i.e. lower border) and is inching back towards the 58.50 horizontal resistance level. Above this area, the channel’s upper border could come under challenge at the 60.75 price level (March 29 and July 12 highs). The 63.75 price level could also become an important resistance point if price is able to break above 60.75.
On the flip side, a break below the channel’s lower border could lead to a price drop to 55.65, with the 54.20 price level (where the neckline of June 2019’s double bottom is found) also coming into focus. Below this level, the double bottom troughs at 51.50 could become a support target.