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Global Economic Concerns Drive Oil Prices Down, OPEC+ Meeting Postponed to November 30th

by Krystal

In the wake of a notable shift in fundamental data in the United States, coupled with sluggish economic indicators from Europe and China, oil prices have continued their descent. The prevailing pessimistic economic outlook has prompted forward-looking markets to factor in a potential decline in oil demand should the global economy contract in the coming months and quarters.

OPEC and its allies, collectively known as OPEC+, were slated to reconvene on Saturday amid increasing speculation of extended supply cuts, a move that typically triggers a rise in oil prices. However, breaking news has confirmed that the meeting has been postponed to November 30th. Analysts suggest potential divergent views within the group as the reason for the delay, though this is yet to be officially confirmed.

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Today’s market activity witnessed a critical test of the 200-day simple moving average (SMA) before trending lower. The 200 SMA, aligning closely with the $82 level—a pivotal point for the commodity—acted as a significant support level. The subsequent level of support is identified at the 50% Fibonacci retracement of the broader 2020 to 2022 move, standing at $77, before attention turns to the $71.50 level. Resistance, on the other hand, remains anchored at the 200 SMA.

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The WTI chart reflects a similar pattern, depicting a rejection of the 200 SMA just above the substantial long-term level of $77.40 (refer to the monthly chart below). Support is established at the previous swing low of $72.50, followed by $67—the lower level designated by the Biden administration for replenishing Strategic Petroleum Reserve (SPR) storage, a process expected to span several years.

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Adding to the bearish sentiment, the formation of an evening star is discernible. Despite materializing within a mature trend, it signals a notable rejection at the 200 SMA.

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The monthly chart underscores the significance of the long-term level at $77.40—a point that has historically served as a catalyst for multiple major reversals and pivot points.

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