- Saudi Arabia hints at additional output cuts.
- OPEC’s Barkindo expects the oil market to be in balance in Q4.
After recording its longest losing streak on Friday and slumping to its lowest level in 9-months at $59.24, the barrel of West Texas Intermediate started the day with a bullish gap and extended its upward correction to a daily high of $61.25. As of writing, the barrel of WTI was trading at $60.90, adding 1.75%, or a little over $1, on the day.
Earlier today, Saudi Arabia’s Energy Minister Khalid al-Falih said that OPEC and its allies agreed that technical analysis revealed a need to cut oil supply next year by around 1 million barrels per day from October levels. Additionally, OPEC Secretary-General Mohammad Barkindo told reporters that they were expecting the oil market to be in balance in the last quarter of the year and added that the demand was forecasted to be below 1.5-1.6 million barrels per day in 2019.
Commenting on today’s price action, “While the oil price has opened on a solid footing today, the knee-jerk reaction to the meeting is likely to subside in the short term until investors take solace in visible signs of a reduction in supply and OPEC lives up to the rhetoric of further supply cuts,” Aneeka Gupta, associate director at exchange-traded fund provider WisdomTree, told Reuters on Monday.
Later this week, investors will be watching OPEC’s and the IEA’s monthly reports on the outlook for global oil supply and demand later this week as well as the API’s and the EIA’s weekly stock reports.
Technical levels to consider
The initial resistance aligns at $61.25 (daily high) ahead of $62.40 (Nov. 8 high) and $63.30 (Nov. 6 high). On the downside, supports could be seen at $60 (psychological level), $59.20 (Nov. 9 low) and $58.20 (Feb. 14 low).
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