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Crude Oil Weekly Outlook: Crude Oil Stalls Ahead of OPEC Meeting

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US Crude oil chart

Supply: IG Charts

CRUDE OIL FUNDAMENTAL HIGHLIGHTS:

  • Crude Oil Upside Stalling
  • OPEC Meeting
  • US-China Compliance Assessment to Set the Tone Early
Oil – US Crude MIXED

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Change in Longs Shorts OI
Each day 13% -12% 1%
Weekly -4% 5% 0%

Crude Oil Upside Stalling

Modest features for Brent crude futures with a 1% improve (at time of writing). Nevertheless, with virus issues remaining within the backdrop, upside has begun to stall for oil costs because the outlook begins to look much less bullish. This had been emphasised by OPEC’s current forecast, during which they downgraded their world oil demand for this 12 months by 400kbpd and 500kbpd for 2021. This additionally comes at a time the place OPEC need to proceed tapering its manufacturing cuts.

OPEC Meeting

Subsequent week OPEC+ JMMC assembly will happen on August 19th. Nevertheless, as is often the case with OPEC conferences, sources will doubtless catch wind of the most recent plans concerning the oil market previous to the assembly. In flip, headline threat is more likely to be barely elevated for oil costs within the coming week.

As a reminder, on the prior assembly, OPEC+ had agreed to taper its report manufacturing cuts of 9.7mbpd to 7.7mbpd from the start of August, which had been line with the unique plan. That mentioned, oil costs have remained in a good vary with COVID instances throughout America and the re-emergence in Europe casting doubts over gas consumption. Though, with oil costs considerably broadly stead, it’s anticipated that OPEC+ will take a “wait and see” stance and thus we anticipate little in means of important modifications to present coverage.

US-China Compliance Assessment to Set the Tone Early

Except for OPEC, the tone for the oil market is more likely to be set early within the week on the fallout from the US-China compliance overview of the part 1 deal (scheduled Aug 15th). In current weeks, President Trump has said that the trade deal means much less to him, as such, focus might flip in the direction of the rhetoric on a number of points round cybersecurity (Huawei, TikTok) in addition to geopolitical issues (particularly Hong Kong Safety Legal guidelines). That mentioned, supply stories from the South China Morning Publish sign that little is anticipated in phrases of a breakthrough, as such, threat urge for food might battle to start the week, conserving oil upside contained.

CRUDE OIL CHART: DAILY TIME FRAME

Crude Oil Chart

Supply: IG

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