OPEC members are facing a difficult decision as they prepare to review oil production quotas on December 1st. On one hand, increasing output is necessary due to weak oil demand projected for 2024 and 2025, coupled with oil prices hitting critical lows. This low pricing is hurting oil-producing nations’ revenues. On the other hand, limiting production could also affect revenue, as countries have the capacity to produce more oil.
Adding to the uncertainty, the upcoming U.S. presidential election could lead to significant policy changes. As former President Trump’s influence grows, his stance on oil fracking and deregulation could result in lower oil prices, further complicating OPEC’s decision. Meanwhile, China’s slowing economy and the global shift toward renewable energy further contribute to the challenges facing the organization.
Risks from Ongoing Conflicts and Oil Price Support
Oil prices have recently stabilized after hitting a four-year low, aided by risks of supply disruptions due to ongoing conflicts such as the Russia-Ukraine war and tensions in the Middle East. While there is some optimism for ceasefires and peace deals in 2025, achieving these agreements may be difficult, and this uncertainty could help keep oil prices supported around the $64 to $65 range.
Technical Outlook: Assessing the Potential for Price Movement
Looking ahead, the four-year support zone between $64 and $65 continues to hold, with upside risks driven by ongoing conflicts. As oil prices consolidate between $64 and $76, any breakout from this range could lead to a sharp price move.
The minor consolidation above the $65 support level is forming a stronger base.
Upside Risks: If oil prices break above resistance levels at $72.30 and $76, they could rise further toward $80 and $84, confirming a bullish outlook.
Downside Risks: A break below the $64 support could push prices down to $58, with the possibility of a further decline to $49.
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