Crude oil price is reacting to OPEC’S adjusted forecast for global oil demand and the probability that US will release the product from its SPR. Despite the heightened volatility, it will likely remain steady above $80 in the short term.
On Thursday, the Organization for Petroleum Exporting Countries (OPEC) adjusted its forecast global oil demand downwards. According to the coalition, the soaring energy prices is expected to dampen demand in the year’s last quarter. As such, it has lowered its forecast for global oil demand in Q4’21.
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Compared to its prediction in the previous month, Thursday’s figure was lower by 330,000 bpd. Last week, the alliance concluded its meeting by maintaining output cuts. It intends to increase production by a modest 400,000 bpd in December.
At the same time, crude oil price is reacting to concerns that the US may release product from its Strategic Petroleum Reserve (SPR). Biden’s administration, as well as other key oil customers across the globe, has been pressuring OPEC to increase production as a means of easing prices.
However, in last week’s meeting, the alliance decided to maintain its output cuts into December. Besides, such a decision by the US would likely be a short-lived solution to the surging crude oil price.
Crude oil price outlook
Crude oil price has been subject to heightened volatility since the beginning of the week. Earlier in the week, it rose to the month’s high at 85.50. However, it has reversed those gains as the bulls continue to defend the support zone of 82.
Even with the exhibited volatility, the commodity is still trading steadily above the crucial support level of 80. In the past week, attempts by the bears to break past that zone were unsuccessful. Brent futures are currently at 82.10, down by 0.51%.
On a two-hour chart, it is trading below the 25 and 50-day exponential moving averages. Besides, in the previous session, there was the formation of a death cross after the 25-day EMA crossed below the 50-day EMA. As the demand and supply dynamics remain at play, crude oil price will likely remain under pressure in the ensuing sessions.
In the immediate term, it will probably trade within a rather tight range of between the support level of 82 and the resistance zone of 83. Further rebounding may place the resistance level at 83.50, which is the point where the 25 and 50-day EMAs converged on Thursday. On the flip side, a decline below 82 will probably place the support at 81.50.
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