Crude Oil Forecast: Monthly OPEC Report in Focus for Brent
BRENT CRUDE OIL (LCOc1) TALKING POINTS
- Attention on OPEC monthly oil report (MOMR) later today.
- Dollar weakness looks to be fading after CPI aftermath.
- Rising wedge still in play.
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BRENT CRUDE OIL FUNDAMENTAL BACKDROP
Brent crude oil prices remained steady this Monday after pushing higher last week citing declining U.S. inflation. Oil markets will be focused on the monthly OPEC report today with the previous October rendition highlighting slowing global growth, declining demand forecasts and reduced supply. Thus far in 2022, OPEC+ nations as a whole have been undershooting on the production side and according to an OPEC+ delegate may look to adjust quotas once more to accurately reflect capacity.
The U.S. dollar is trading higher this morning as markets digest economic data from last week. Since then, Fed speakers have reiterated the importance against the fight on inflation and although the pace of interest rates hikes may be moderated, this does not mean a pause or reversal of the hawkish narrative. With this in mind, the USD should remain elevated over the next few months.
Other than the OPEC report later this evening, there are mostly low impact events scheduled for today (see economic calendar below) but we could see the Fed’s Brainard emphasize the focus on tackling inflationary pressures considering she is a known to be skewed to the hawkish camp.
Source: DailyFX economic calendar
BRENT CRUDE (LCOc1) DAILY CHART -UNDATED
Chart prepared by Warren Venketas, IG
Daily brent crude price action remains within the emergent rising wedge chart formation (black) but above the psychological 95.00 support handle. Short-term there could be a re-test of this level towards the lower bound of the wedge.
Key resistance levels:
- Wedge resistance
Key support levels:
- Wedge support
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IG CLIENT SENTIMENT: MIXED
IGCS shows retail traders are NET LONG on crude oil, with 68% of traders currently holding short positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment however, due to recent changes in long and short term positioning we arrive at a short-term cautious bias.
Contact and followWarrenon Twitter:@WVenketas
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.