By ForexTime
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Sunday, 26th November
The global commodity is under intense pressure, heading for its fourth straight week of declines.
Note: A bear market happens when an instrument drops by 20% or more from its most recent high.
Before the hefty 4.7% selloff this week, oil prices were already being pressured by weak data from China and easing fears over the Israel-Hamas conflict disrupting supply from the region.
With the path of least resistance for oil pointing south, further losses could be on the cards.
Here are 4 key factors that may influence oil in the week ahead:
It is worth noting that markets received 2 weeks of data from the EIA due to a planned system upgrade.
Crude oil inventories expanded for a fourth week, rising by 3.6 million barrels in the week ended November 10. This was followed by a huge 13.9 million-barrel build in the previous period.
The next EIA report published on Wednesday 22nd November may shape oil’s short to medium-term outlook.
Much has changed since the Federal Reserve policy meeting on the 1st of November with the soft US inflation report extinguishing any remaining bets around the Fed hiking rates.
Nevertheless, the Fed minutes could offer additional insight into what Fed officials thought about the US economic outlook. On the data front, there will be some key economic releases including the US initial jobless claims, university of Michigan consumer sentiment, and manufacturing PMI which could trigger dollar volatility.
Oil prices are trading at their lowest levels since July ahead of the OPEC+ meeting on Sunday 26th November.
The latest selloff in oil prices has added more focus to the upcoming meeting, opening the doors for greater supply cuts as the cartel continues its quest to rebalance markets. It is worth keeping in mind that OPEC+ has been cutting production since late 2022 with a broader deal to limit supply throughout 2024.
Markets already expect the extension of production cuts by Saudi Arabia and Russia into the early parts of 2024. So, the cartel may need to offer something new to revive oil bulls.
Prices are under intense pressure on the daily charts with crude respecting a bearish channel. There have been consistently lower lows and lower highs while the MACD trades to the downside. However, the Relative Strength Index (RSI) is flirting near 30, indicating that crude may be oversold. While this has the potential to trigger a technical rebound, the scales of power remain in favour of bears.
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