Oil sells off as OPEC+ meeting gets delayed on Saudi dissatisfaction
- WTI Oil is facing a firm downturn in the coming trading day.
- The US Dollar rallies on the publication of the Fed Minutes.
- Oil is at risk of dropping back to $74 and lower, as more bearish elements emerge.
Oil prices are falling like a rock at the US trading session as markets are repricing recent string of events. The recent repricing is granted after a ceasefire between Israel and Palestine and the overnight numbers from the American Petroleum Institute revealed a very substantial build in US stockpiles. These key elements are enough to send Oil prices lower this Wednesday.
Meanwhile, the US Dollar (USD) is soaring after the latest Fed Minutes was published on Tuesday night. Although no surprises, markets got spooked a bit by the fact that all members were unanimously agreeing not to move rates anytime soon. This means that markets need to pull back a bit of their earlier enthusiasm that rate cuts could emerge very soon. The latest Minutes thus reveal that markets have been a bit too enthusiastic, which means that yields could start soaring a bit and the Greenback gains a bit of strength in the US Dollar Index (DXY).
Oil news and market movers: Bearish elements too strong
OPEC+ might need to cancel this weekend's meeting as Saudi Arabia is not happy with the unwillingness of other countries to cut production, in order to support crude prices.
The overnight build in stockpile numbers reported by the American Petroleum Institute (API) on Tuesday evening revealed a 9.047 million build in barrels.
This further confirms the element that the US is ramping up production.
The fact that US production and stockpiles are soaring, will urge OPEC to agree on deeper cuts. Efforts from Saudi Arabia will not be enough and a joint approach will be needed if OPEC+ wants to keep Oil prices where they are at the moment.
A packed commodities calendar this evening with Thanksgiving shortening the trading week in the US:
Near 15:30 GMT the Energy Information Administration (EIA) will release the change in crude stockpile in the US: Expectations are for a minor build of 0.9 million against 3.6 million last week.
The EIA is also due to release near 17:00 GMT the Natural Gas Storage Change for last week: Expectations are for a build of 1 billion cubic feet against 60 billion last week.
The Baker Hughes US Oil Rig Count numbers are due at 18:00 GMT. The previous result was 500 with no forecast pencilled in.
Oil Technical Analysis: even lower demand as before
Oil prices are gearing up for a very packed US calendar. All numbers that normally would come out from Wednesday to Friday, will now be concentrated on this Wednesday evening as Thanksgiving is taking place on Thursday. Expect to see substantial volatility. For now crude prices are steady despite the headlines about a ceasefire in the Middle East and the recent build in US stockpile. Should this Wednesday evening’s EIA numbers reveal a similar big build, expect to see a substantial drop ahead of the OPEC meeting this weekend.
On the upside, $80.00 is the resistance to watch out for. Should crude be able to jump higher again, look for $84.00 (purple line) as the next level to see some selling pressure or profit taking. Should Oil prices be able to consolidate above there, the topside for this fall near $93.00 could come back into play.
On the downside, traders are seeing a soft floor forming near $74.00. This level is acting as the last line of defence before entering $70.00 and lower. Once in that area, markets might factor in the risk of a surprise intervention from OPEC+ to jack up Oil prices once again.