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Weekly Crude Oil Forecast: OPEC+ Supply, U.S. Dollar and Economic Data in Focus

Weekly Crude Oil Forecast: OPEC+ Supply, U.S. Dollar and Economic Data in Focus

Warren Venketas, Analyst


  • OPEC+ increases output target.
  • Attention shifts to key Chinese and U.S. data.


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Brent crude oil finished the week off strong post- NFP despite a stronger U.S. dollar. We saw OPEC+ agreeing to an increase of approximately 648Mbbls/d for July and August respectively which is a marked increase from the previously agreed upon 432Mbbls/d. Interestingly, the increase in supply included Russia despite reports of a potential exclusion due to sanctions on Russian oil.

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Typically, an increase in supply of this magnitude should ease crude oil prices but with OPEC+ member nations currently struggling with supply targets at a much reduced volume, the 648Mbbls/d looks like a stretch for many contributing nations. The graphic below from ING illustrates the shortfall leading up to the revised supply target. I do not see this trend changing over the next two months which should keep crude oil prices elevated.

Source: ING

U.S. inventories as reported by the Energy Information Administration (EIA) supplemented oil bulls after significant drawbacks in stockpiles allowing for a breach of the $115/barrel resistance level.

Another key factor to crude oil prices stems from the demand-side, and in particular the Chinese economy. Being the largest consumer of crude oil, the hindrance of COVID-19 has negatively impacted demand forecasts and consequently muted crude oil price increases.


Looking ahead to next week, the China theme kicks off the trading week with PMI data which has been on the decline since December 2021. Another print lower could weigh negatively on crude oil.

From the dollar perspective (historically inverse relationship with crude oil prices), U.S. inflation dominates the calendar with markets in anticipation of whether or not inflation is in fact declining for a second consecutive issue or not. Meanwhile, the dollar is already on the ascension after strong manufacturing PMI and labor data reinforces the hawkish narrative by the Federal Reserve.

Source: DailyFX Economic Calendar

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Chart prepared by Warren Venketas, IG

The weekly brent crude candle looks to be closing above the psychological $150/barrel mark for the second week in a row which could cement the level as a definitive line in the sand.


Chart prepared by Warren Venketas, IG

Price action on the daily chart gives bulls hope for a retest of the recent swing high at $120.62 but caution should be exercised as fundamentals regarding the EU oil embargo on Russian oil and Russia’s potential retaliation remains uncertain.

Key resistance levels:

  • $120.26

Key support levels:

  • $115.00
  • 20-day EMA (purple)
  • 50-day EMA (blue)


IGCS shows retail traders are marginally NET SHORT on Crude Oil, with 63% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term upside bias.

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Contact and follow Warren on Twitter: @WVenketas

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.