Crude Oil Price Weekly Forecast – Crude Oil Stall Awaiting the OPEC Meeting

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CRUDE OIL TECHNICAL OUTLOOK

  • OPEC Meeting
  • Crude oil upside trend stalling
  • China-US Compliance evaluation to preset the tone early

CRUDE OIL UPTREND STALLING

Crude oil’s moderate surge for the Brent crude oil futures with a 1% increase. Nevertheless, with COVID-19 concerns still being a significant backdrop, the uptrend has started stalling for the prices of crude oil as the forecast starts to appear less bullish. In essence, this has been further emphasized by OPEC’s forecast, where they downgraded the global oil demand in 2020 by about 400 kpbd and this is likely to go up by 400kbpd for the year 2021. Technically speaking, this comes at a period where OPEC is looking to continue interfering with the production cuts.

The next OPEC meeting will be held on 19th August. Nevertheless, as its usually the case with the recent OPEC meetings, sources will most definitely know about the new plans about the oil markets before this meeting. On the other hand, the headline risk is highly likely to be substantially increased for the prices of oil in the next few weeks as Crude Oil Edge Lower After Surge on US Stocks Draw.

As a great reminder, at a meeting held early on, the OPEC has initially made a deal to taper their record production cuts of about 9.7mbpd to about 7.7mbpd from early august that has been in line with the initial plan. Having said this, the prices of oil have remained in a fixed range with coronavirus infections across the US and re-emergence of new cases in Europe casing more doubts overconsumption of fuel. Even though, with the prices of oil somehow broadly stead, it’s highly likely that OPEC will play a wait and see the game and therefore we should only expect very little in regards to the latest changes to the current policies.

US-CHINA COMPLIANCE REVIEW

Besides OPEC, the oil market tone is highly likely to be created earlier this week on the fallout from this US-China compliance review for stage 1 deal. In the next few weeks, Trump has said that the agreement means very little to him because such issues might turn to the more significant issues regarding cybersecurity (TikTok, Huawei) not to mention the geopolitical issues (Hong Kong Security Laws). Having said that, further reports from the South China Morning Post show that very little is expected with regards to a substantial breakthrough. As a result, the risk appetite might struggle to start the new week, keeping the prices of oil’s uptrend contained.

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