Brent Crude: Oil Optimism Grows Amid OPEC+ Extension of Production Cuts

Brent Crude – Oil Eyes Recovery as OPEC + Deliberate Oil Cut Rollover

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Oil prices have risen in early European trade following a 2.7% drop on Monday. Hopes of a ceasefire in the Middle East helped push Oil price lower as markets focus shifted back toward supply demand dynamics. 

Adding to Brent Crude’s challenges was rumors that Donald Trump may slash the red tape around oil drilling on Federal lands. There are also rumors that Trump may confront the IEA around their focus on green energy. This was another factor in the possible drop in oil prices.

OPEC + to Consider Oil Cut Rollover in December

OPEC + are set to meet on December 1 in what has been confirmed to be an online meeting. Rumors have begun to do the rounds that the Oil cartel will debate and confirm an Oil cut rollover into 2025. 

Azerbaijan Energy Minister Parviz Shahbazov confirmed as much, stating that “OPEC+ could or couldn’t discuss oil output rollover at its next meeting. It is difficult to prejudge”. Three OPEC+ sources familiar with the discussions told Reuters last week that it may push back output increases again when it meets on Dec. 1 due to weak global oil demand.

OPEC + and the IEA continue to have differing views on Oil demand moving forward. Today we heard comments from the head of the International Energy Agency (IEA) Fatih Birol. Mr Birol stated that the supply of oil and gas will be plentiful, with oil markets being “comfortable” this year and next unless major geopolitical escalation happens.

Of course as things are shaping up this may be a real reality as the Russia-Ukraine conflict heats. At the same time there are murmurs that the US may look to confront Iran head on during the Trump Presidency.

Oil Inventory Data Ahead 

The upcoming API and EIA oil inventory data releases on November 26 and 27, 2024 will provide critical insights into U.S. crude supply levels, helping traders and analysts gauge the balance between supply and demand.

If the data reveals a larger-than-expected inventory build, it may signal weaker demand or oversupply, likely putting downward pressure on oil prices. Conversely, a substantial draw in inventories could highlight tighter supply conditions and potentially trigger a price rally. 

Either way the bigger question on my mind is whether either move will be sustainable.

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Technical Analysis

From a technical perspective, Oil has been stuck in a tight range over the six weeks. The range between 76.35 and the 71.00 handle continues to hold firm. 

Yesterday’s selloff found support just shy of the key level around 72.38 before bouncing and moving higher in the European session. Immediate resistance rests around the psychological 75.00 handle before the range high at 76.35 comes into focus. If the range breaks we have the 100-day MA resting at 76.83.

Should the selloff resume today, immediate support rests at 72.38 before the 71.00 handle comes into focus. A break of the range low at 71.00 could lead to a sharp decline toward the psychological 70.00 handle and beyond.

Brent Crude Oil Daily Chart, November 26, 2024

Source: TradingView (click to enlarge)

Support

Resistance

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