OIL PRICE FORECAST:
- Oil Continues to Advance as Supply Concerns and Potential Rebound in Demand Keep Prices Elevated.
- Saudi Energy Minister to Provide a Further Update this Week on the Potential for Further Cuts or an Extension into 2024.
- IG Client Sentiment Shows Traders are 79% Net-Short on WTI at Present.
- To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section.
Most Read: What is OPEC and What is Their Role in Global Markets?
Oil prices are attempting a recovery today having breached the 200-day MA for the first time since July 24. This is a big milestone that comes amid concerns of weakening demand and increasing stockpiles. The idea that interest rates may remain restrictive for a while to come has also weighed down on oil prices as we head toward the end of the year.
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INVENTORIES BUILD AND EIA DELAY DATA RELEASE
As previously discussed, the uncertainty around a Chinese recovery has not been felt by markets in 2023 as the worlds second largest economy has bought Oil at a record pace in order to replenish reserves. However, the uncertainty will continue until it appears that the Chinese authorities are happy with the levels.
At the moment though the bigger fear lies in a slowdown in the US. There have been signs of late that the cumulative tightening by the FED is beginning to bear fruit as US Data shows some signs of strain. According to reports U.S. crude oil inventories increased by 11.9 million barrels over the week to Nov. 3, citing API data. If this number turns out to be correct it would be the the biggest weekly build since February. The US EIA for its art has delayed its report his week owing to an upgrade which has left market participants in a conundrum of sorts.
LOOKING AHEAD
Attention is likely to turn now toward next week which will see updates from both the OPEC and IEA on the global supply and demand conditions. OPEC meanwhile is scheduled to meet at the end of the month for a discussion on its output policy heading into 2024 as the prospect of Venezuela returning to higher production levels likely to be discussed as well.
We do not have a lot in terms of data which could have a material impact on oil prices. We do however have Michigan Consumer Sentiment Data and a couple of Fed policymakers scheduled to speak tomorrow. This could add volatility to the US Dollar and could have a short-term impact on the price of oil.
For all market-moving economic releases and events, see the DailyFX Calendar
TECHNICAL OUTLOOK AND FINAL THOUGHTS
From a technical perspective WTI has finally broken below the 200-day MA and yet appears to be running out of steam. Looking at the daily candle and we have failed to slip below Yesterdays low and look on course for an inverted hammer candle close. If this does not come to fruition than there is a real chance of continued downside with the initial support area resting around the 73.06 handle.
Key Levels to Keep an Eye On:
Support levels:
Resistance levels:
WTI Crude Oil Daily Chart – November 9, 2023
Source: TradingView
IG CLIENT SENTIMENT
IG Client Sentiment data tells us that 87% of Traders are currently holding Long positions. Given the contrarian view adopted here at DailyFX toward client sentiment, Is WTI Destined to fall further?
For a more in-depth look at WTI/Oil Price sentiment and the changes in long and short positioning, download the free guide below.
| Change in | Longs | Shorts | OI |
| Daily | 3% | -6% | 2% |
| Weekly | 31% | -32% | 16% |
Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda