The WTI futures (NYMEX: CL) have had a rough streak recently, sliding for five straight weeks and kicking off this one in a similar fashion, shrinking during early trade hours. A sense of intrigue lingers in the air, fuelled by the imminent OPEC+ gathering later in the week. The expectation hangs heavy that the cartel will forge an agreement to temper supply into 2024, a move aimed at shoring up the market against its downward slide.
Yet, the recent OPEC+ escapade adds a layer of unpredictability to the narrative. The initially scheduled meeting on Sunday was abruptly deferred, unveiling internal discord over production targets for African producers. Reports suggest a tug-of-war between African producers’ aspirations for higher caps in 2024 and the desire of major players, such as Saudi Arabia and Russia, to prolong voluntary supply cuts into the same horizon, with potential discussions about deeper cuts on the table. Unimpressed by this internal strife, the market finds itself already weighed down by abundant supplies from non-OPEC members, as underscored by the stark figures in the EIA Crude Oil Stocks Change report. The previous week witnessed a staggering 8.701 million barrel surge in inventories, far surpassing the modest 1.160 million consensus.
Yet, the OPEC meeting is not the sole protagonist for the week. On Thursday, a secondary plotline unfolds with the impending unveiling of the US PCE Price Index, a crucial measure of inflation preferred by the Federal Reserve. This confluence of events shapes the current week into a pivotal trading session for oil, laden with challenges that traders are poised to navigate.
Sources: Koyfin, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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