Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please ensure that you fully understand the risks involved.

OPEC meeting expected to ramp up crude volatility and impact oil price

With G20 meetings and an upcoming OPEC meeting up ahead, crude oil looks set for heightened volatility in the coming days.

OPEC Source: Bloomberg

The coming days look set to bring substantial volatility for the oil market, with the weekend G20 meeting between the US President Donald Trump and China President Xi Jinping providing a backdrop to the Organisation of the Petroleum Exporting Countries (OPEC) meeting which reaches its conclusion on Tuesday.

However, while the US-China trade talks remain a key focus for markets over the weekend, we are also keeping a close eye on developments from a meeting between Saudi Crown Prince Mohammed bin Salman and Russia President Vladimir Putin at the G20 summit. Given that OPEC needs continued buy-in from Russia, that meeting is essentially provides a crucial precursor to Monday’s meeting.

US production and stockpiles shape expectations

That OPEC meeting has been widely anticipated given the huge swings in US inventories of late. With record crude production in the US, we have seen a substantial ramp up in stockpiles throughout much of the second quarter (Q2).

That rise in output brought prices coming crashing down, with WTI hitting a four-month low in early June. Interestingly, while OPEC market manipulation provides the traditional method of bringing prices back into line, the fact that prices are being driven lower by rising US output is plenty reasoning to doubt how keen some OPEC members would be to cut production. However, the past two weeks has seen a substantial shift in US inventories, with a sharp decline seemingly paving the way for an easier meeting next week.

For the most part, markets are expecting to see OPEC+ extend the current levels of output for another six months, bringing a potential boost to prices. We have also seen Iranian outputs stifled amid a ramp-up in US sanctions. That shift in US inventories, coupled with expectations of an OPEC deal and falling Iranian output has amounted to a welcome boost for oil prices.

Charting crude prices

The weekly chart below highlights the upward shift for the stochastic oscillator, following up on bullish divergence seen in April. We are into our third week of gains over the course of the last month, with further upside looking likely to build on this recent rebound. Much will come down to what OPEC manage to do, with a failure to extend production at depressed levels likely to lead prices heavily lower.

Brent weekly chart Source: ProRealTime
Brent weekly chart Source: ProRealTime

Looking at the four-hour chart, we can see a clear and consistent uptrend over the past fortnight, with the current sideways consolidation likely to lead towards further upside. With Brent prices rising back towards the $66.04 level, a break through there would likely lead into another leg higher from here. Conversely, a decline below the $63.54 swing low would bring about a more bearish wider view.

Brent four-hour chart Source: ProRealTime
Brent four-hour chart Source: ProRealTime

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Trade on commodities

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years

1In the case of all DFBs, there is a fixed expiry at some point in the future.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Tuesday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.