Crude prices saw a small dip today after 10:00 am GMT after the media reported that OPEC decided to cancel the joint technical committee (JTC) meeting. Meetings of JTC usually precedes OPEC ministerial meetings and prepares recommendations for ministerial meetings. Cancellation of JTC meeting strongly hints that no decision to change policy or output levels will be made at the next OPEC+ meeting on Sunday, December 4. On top of that, it should be noted that the upcoming meeting will be held online, which is another hint that no big announcement will be made.
This suggests that OPEC wants to wait and see how the situation with looming restrictions on Russian oil, which are set to go live on December 5, 2022, develops. However, it should be said that there are reasons for the cartel to further tighten oil supply. Oil futures curve has recently moved into contango, meaning that near-dated contracts are priced at discount to long-dated contracts. This hints at weak near-term demand and could be used as justification for further output cuts.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appTaking a look at WTI chart (OIL.WTI) at D1 interval, we can see that crude prices bounced off an almost 1-year low, reached at the beginning of this week. While a lack of output cut from OPEC+ could see some stabilization on the oil market, it should be noted that with economic contraction in sight and weakening demand, it seems to be just a matter of time until the cartel decides to lower production further.
Source: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
