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.

Crude oil forecast: OPEC+ on tap as prices languish below key moving average

Oil prices put in worst month of the year as myriad of factors drag sentiment AND OPEC may opt to forego a preplanned production increases amid Omicron.

Oil prices collapsed in November, with WTI Crude (SGD1 Contract) and ETFS Brent Crude benchmarks putting in the biggest losses since March 2020. Crude oil fell over 20% last month, with much of the weakness coming in the last two weeks. The emerging Omicron Covid strain put a hit on demand prospects after several countries moved to block travel from South Africa, where the strain is thought to originate from. Prices are moving higher to start December, although there is now a large hole to climb out of.

The Omicron news comes at perhaps the worst time for oil bulls. Prices were already moving lower earlier in November on rumors that the United States was preparing to announce the release of stocks from the Strategic Petroleum Reserve (SPR). That announcement followed shortly after in a coordinated effort with other countries, including China and the United Kingdom.

OPEC and its allies, known as OPEC+, will meet this week to discuss whether to increase market supply by 400,000 barrels per day. However, given the recent Covid developments and sharp price drop, the cartel may opt for a more cautious route. Moving forward with the preplanned increase risks a further drop in prices. Analysts expect oil markets to move into a surplus next year as demand levels off amid increasing production.

The cartel must carefully balance its proposed production increases. On one hand, OPEC members want to keep prices high by carefully throttling supply, but keeping as tight a grip risks sending prices near $100 per barrel. That would likely fuel a shale boom in the United States, however, which would work against the group. On the other hand, being too loose with supply would likely tank prices. That said, a cautious approach is most likely. Oil prices are unlikely to rally until health experts better assess the current Omicron threat.

Crude oil technical forecast

Prices are recovering today, but the technical outlook remains bearish given the recent breakdown. The 200-day Simple Moving Average (SMA) was breached after WTI pierced below a prior trendline. The RSI indicator showed prices moving out of oversold conditions, with MACD accelerating lower. The outlook, for now, remains bearish while below the 200-day SMA.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products. ​

The material on this page does not contain a record of IG’s trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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.

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.

Introducing our best ever web platform

Enhance your CFD trading with the new IG Trading platform:

  • Quicker deals, with one-click execution from lists

  • Real-time updates, with news and Twitter feeds

  • Orders to part close, price change alerts, a dark theme and more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

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

liveprices.javascriptrequired

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 Monday 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.