{"id":63903,"date":"2023-06-01T16:43:22","date_gmt":"2023-06-01T13:43:22","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=63903"},"modified":"2024-07-10T16:56:17","modified_gmt":"2024-07-10T13:56:17","slug":"oil-moves-lower-as-traders-await-opec-meeting","status":"publish","type":"post","link":"https:\/\/www.ironfxcn.com\/ph\/oil-moves-lower-as-traders-await-opec-meeting\/","title":{"rendered":"Oil moves lower, as traders await OPEC+ meeting"},"content":{"rendered":"

WTI moved lower<\/strong> for the 4th<\/sup> week<\/strong> in a row, dropping to one month lows<\/strong>. Prospects for future demand and production levels seem to remain in the epicentre of attention for market participants, guiding the market sentiment and oil prices. In this report, we aim to shed light on the factors driving WTI\u2019s price, assess its future outlook and conclude with a technical analysis.<\/p>\n\n\n\n

US oil market continues to tighten.<\/strong><\/h2>\n\n\n\n

The Oil market appeared to further tighten<\/strong> last Friday, when the US Baker Hughes oil rig<\/strong> count dropped<\/strong> to levels last seen<\/strong> in June<\/strong> 2020<\/strong>. The continuation of the reduction<\/strong> of oil rigs, appears to aid to the narrative<\/strong> that Oil producers <\/strong>alongside the market<\/strong> are anticipating global economies<\/strong> to enter a recession<\/strong>. Furthermore, fears of a reduction<\/strong> in global demand<\/strong>, where heightened<\/strong> following the release of <\/strong> China\u2019s NBS<\/strong> Manufacturing<\/strong> PMI figures<\/strong> which indicated a contraction<\/strong> in the manufacturing<\/strong> activity of the world\u2019s largest<\/strong> oil importer<\/strong>. However, China\u2019s Caixin<\/strong> Manufacturing<\/strong> PMI figures<\/strong>, indicated a different<\/strong> picture<\/strong>, as the figure rose to 50.9 from its previous 49.5, hence implying an expansion in manufacturing<\/strong> activity.  <\/strong>Given that the two appear to be at odds as to whether China\u2019s Manufacturing activity has contracted<\/strong> o expanded<\/strong>, yet our personal view is that China\u2019s Manufacturing activity<\/strong> has potentially declined<\/strong> as the mounting<\/strong> tensions<\/strong> between China and the US seem to have deterred<\/strong> long term investment<\/strong> from US based companies<\/strong>.<\/p>\n\n\n\n

US default worries appear to have eased.<\/strong><\/h2>\n\n\n\n

Oil (Langis)<\/strong> participants<\/strong> see the light at the end of the tunnel, <\/strong>following the passing<\/strong> of the US debt ceiling bill<\/strong> by the House of Representatives<\/strong> on Wednesday<\/strong>, with the bill<\/strong> now being sent to the Senate<\/strong> where it is anticipated to be voted<\/strong> through<\/strong>. The positive<\/strong> development<\/strong> may have provided<\/strong> some support<\/strong> for oil\u2019s prices, as the risk<\/strong> of a US default<\/strong> has greatly<\/strong> diminished<\/strong>. <\/strong>Hence by avoiding<\/strong> a recession<\/strong>, producers are regaining some confidence<\/strong> that demand<\/strong> for oil will continue<\/strong>, hence temporarily<\/strong> halting<\/strong> the liquid golds decent<\/strong>. However, on the extreme<\/strong> possibility<\/strong> that it does not pass the Senate, we may see Oil (Langis)<\/strong> further weakening<\/strong>. Lastly, by passing<\/strong> the debt ceiling bill<\/strong>, oil<\/strong> market confidence may be more optimistic<\/strong> in the long<\/strong> run<\/strong>, as the bill also includes that the National Environmental Policy<\/strong> act will be limited<\/strong> to just two years for Federal projects and as such may provide further<\/strong> support<\/strong> for oil\u2019s<\/strong> price in the future<\/strong>, as less regulatory obstacles may be in the way of new projects.<\/p>\n\n\n\n

OPEC+ meeting this weekend.<\/strong><\/h2>\n\n\n\n

Last but not least we highlight the importance<\/strong> of OPEC+<\/strong> meeting<\/strong> during this weekend<\/strong>. Surprisingly it has been reported<\/strong> that various <\/strong>media groups have been barred<\/strong> from attending<\/strong> the meeting<\/strong>, a move which is highly<\/strong> irregular<\/strong> and as such may have increased<\/strong> market Pagbabagu-bago<\/strong>.  <\/strong>Following last week\u2019s comments by Saudi Arabia\u2019s energy minister<\/strong> who warned speculators<\/strong> to \u201cwatch out<\/strong>\u201d, we anticipate<\/strong> that Saudi<\/strong> Arabia<\/strong> will push<\/strong> for further<\/strong> production cuts<\/strong>, potentially supporting<\/strong> oil\u2019s price<\/strong>. In addition, in the grander scheme of things, with the price of Oil dropping<\/strong> significantly<\/strong> we hypothesize<\/strong> that should OPEC+ announce oil cuts<\/strong>, they may be smaller<\/strong> in magnitude and more of a symbolic<\/strong> cut but could still support<\/strong> oil\u2019s<\/strong> price<\/strong>. However<\/strong>, on the other hand should they increase<\/strong> o maintain<\/strong> production<\/strong>, then we may see Oil (Langis)<\/strong> further weakening<\/strong> as there will be an increase<\/strong> in supply<\/strong> in the oil<\/strong> market, thus making oil<\/strong>, cheaper<\/strong> for buyers.<\/p>\n\n\n\n

Teknikal na Pagsusuri<\/strong><\/h2>\n\n\n\n

WTI Cash 4H Chart<\/strong><\/h3>\n\n\n\n
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