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OPEC+ Policy Meeting on September 5th
Here is the technical and the macro outlook for oil futures.
The Macro Outlook for Oil
The major oil producing countries in OPEC+ are meeting to decide future policy relating to oil. If you are invested in oil or oil related equities then this is absolutely something you want to be paying close attention to. At this meeting the major oil producing countries will essentially decide on future oil production or output going forward. Decreasing output would be bullish for oil prices. Increasing output would be bearish. Keeping output the same, which is what most analyst believe will happen, would not be neutral.
Generally speaking the supply chain issues with oil caused by the Russian war are slowly solving themselves naturally. Which is slightly bearish. This is ultimately the main reason fot the several month long downtrend. So this OPEC meeting could possibly be the deciding factor if oil wants to break from this downtrend and get more upside.
Generally speaking the supply chain issues with oil caused by the Russian war are slowly solving themselves naturally. Which is slightly bearish. This is ultimately the main reason fot the several month long downtrend. So this OPEC meeting could possibly be the deciding factor if oil wants to break from this downtrend and get more upside.
An article by Reuters states that an output cut is not out of the question. Other sources from OPEC+ say that reducing production would have negative political backlash. The Iranian nuclear deal is supposed to release oil to the market which would bring down oil prices. But the deal is still not near a close yet. Also Saudi Arabia said that they would possibly cut output to stabilize oil futures prices if Iranian oil is reintroduced into the market. I should also mention that an OPEC+ panel has already hinted towards a reduced supply surpluss in the future. This could give us a hint towards the possible outcome of the upcoming OPEC policy meeting.
Here is a link to the Reuters article: https://www.reuters.com/business/energy/opec-weigh-rollover-or-cut-sept-5-meeting-sources-say-2022-09-02/
We will find out what OPEC plus is going to do on September 5th. Also I should mention how convenient it is that the OPEC+ meeting is coinciding with Crude Future's price reaching a major technical support zone. This happens often in technical trading.
You can see the long term support level created from October's highs in the picture above. You will see very often in technical trading that major event catalyst, like an OPEC+ meeting, typically happen around major support or resistance zones like this.
Also notice the price channel that Crude Future's price has been traveling within over the past several months. You can see that in the picture directly above. The price is near support of this price channel and the long-term support I have already mentioned. Technically speaking this is a sound entry point for a short-term long position theoretically. But all trade ideas must wait for the results of the OPEC meeting. If the OPEC+ meeting surprises people with an increase in oil output. Then we will almost surely see Crude Future's price drop below that major horizontal support level.
If you follow the trend and the technical levels then you should be following this price channel. Until the price can break out of this price channel all of the short-term plays or trade ideas you have should be based off of this price channel. This is illustraded in the chart above.
I should mention one bearish aspect of the technical outlook which is the fact that the price action in Crude Futures has dipped below the 200-day moving average. Also the price is downtrending below the 50-week moving average. This is a bearish look as these are major moving averages that many investors use as strong support and resistance levels. You can see this illustrated in the two pictures above.
One thing you should be keeping in the back of your mind is the fact that if oil prices get to those sky high levels again then that will be very bad as it would surely add to inflation. That would be very bad for equities in general because the FED's actions are killing equities to fight inflation basically.
So what will be the price action for oil futures following the OPEC+ meeting?
$Exxon Mobil (XOM.US)$ $Chevron (CVX.US)$ $Phillips 66 (PSX.US)$ $Valero Energy (VLO.US)$ $Devon Energy (DVN.US)$ $Occidental Petroleum (OXY.US)$ $W&T Offshore (WTI.US)$ $United States Oil Fund LP (USO.US)$ $United Sts Brent Oil Fd Lp Unit (BNO.US)$ $Imperial Petroleum (IMPP.US)$ $Houston American Energy (HUSA.US)$ $Indonesia Energy (INDO.US)$ $BP PLC (BP.US)$
$SPDR Dow Jones Industrial Average Trust (DIA.US)$ $Invesco QQQ Trust (QQQ.US)$ $iShares Russell 2000 ETF (IWM.US)$ $VIX Index Futures(APR5) (VXmain.US)$ $Powershares Exchange Traded Fd Tst Db Us Dollar Index Bullish Fund Etf (UUP.US)$ $SPDR S&P 500 ETF (SPY.US)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $SPDR Gold ETF (GLD.US)$ $iShares Silver Trust (SLV.US)$ $Crude Oil Futures(MAY5) (CLmain.US)$ $Ishares Iboxx $ High Yield Corporate Bond Etf (HYG.US)$ $Ishares Iboxx $ Investment Grade Corporate Bond Etf (LQD.US)$ $Copper Futures(MAY5) (HGmain.US)$
$Hang Seng Index (800000.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
$SPDR Dow Jones Industrial Average Trust (DIA.US)$ $Invesco QQQ Trust (QQQ.US)$ $iShares Russell 2000 ETF (IWM.US)$ $VIX Index Futures(APR5) (VXmain.US)$ $Powershares Exchange Traded Fd Tst Db Us Dollar Index Bullish Fund Etf (UUP.US)$ $SPDR S&P 500 ETF (SPY.US)$ $iShares 20+ Year Treasury Bond ETF (TLT.US)$ $SPDR Gold ETF (GLD.US)$ $iShares Silver Trust (SLV.US)$ $Crude Oil Futures(MAY5) (CLmain.US)$ $Ishares Iboxx $ High Yield Corporate Bond Etf (HYG.US)$ $Ishares Iboxx $ Investment Grade Corporate Bond Etf (LQD.US)$ $Copper Futures(MAY5) (HGmain.US)$
$Hang Seng Index (800000.HK)$ $SSE Composite Index (000001.SH)$ $CSI 300 Index (000300.SH)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
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Violets : I thought that they already decided last week to reduce output but maybe what I read was that Saudi was going to do that
Birdistheword : It’s getting saucy spyder..it’ll be interesting to see how this week plays out. I’m following every bit of it. What’s your take on the price cap deal? And gazprom holding out? What do you think will be the affects of it and ru reaction? I guess I’m speculating here but I think there’s a possibility of another rally.
SpyderCall OP Violets : if I remember correctly then I think they said he said that they would decrease production to stabilize volatile oil prices if Iranian oil was introduced into the market. one OPEC panel said that they decreased the forecast for the future supply surplus. basically they're expecting less of a supply in the future. I don't think any of these countries have actually cut production yet
Violets SpyderCall OP : Thank you!
SpyderCall OP Birdistheword : natural gas is the real commodity to watch during this energy crisis in Europe and whatnot.
warmhearted Puppy_93 : Gas has a lot of time to make money on. Just have to be able to find the right stock. All the new FlexFuel cars take gas and I have been seeing more of them on the road in the past three months. Don't forget about all the toys that we have boats,ski's atv,atc etc . But what do I know, Nothing.
bullrider_21 Violets : There were talks, but they will probably only cut on Oct 5. Now, they are rumoured to be cutting up to 2 m bpd.
Giovanni Ayala : Well who knows now Russia wants to throw Nukes
SpyderCall OP bullrider_21 : that is a very big decrease in output. I know that one OPEC official said that they would produce enough oil for the present demand. They just want to keep oil at these high prices.
SpyderCall OP Giovanni Ayala : They say that they don't want to go nuclear. but then the media is saying there is nuclear threats
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