Oil prices are holding flat this Tuesday in a very narrow trading range while nervousness builds ahead of the OPEC+ conference over the weekend. With the meeting due on November 26th, it looks like rumors are spreading in the markets that Saudi Arabia might prolong and broaden its production cut in volume and duration. Oil refineries are caught in the middle with stock piles rising, triggering less demand, margins becoming thinner and supply wearing thin.
Meanwhile, the US Dollar (USD) keeps printing a fresh two-month low and is at a crucial point in terms of price action in the US Dollar Index (DXY). The DXY price is crossing two very crucial technical moving averages which means that a more substantial downside could come. The Greenback could ease further, for example against the Euro (EUR/USD) to 1.1180, which would mean another 2.5% devaluation for the Greenback. Crude Oil (WTI) trades at $77.38 per barrel and Brent Oil trades at $81.89 per barrel at the time of writing. Oil prices are set to move as market expectations are soaring for any kind of production cuts from OPEC. With the OPEC+ ministers meeting this weekend, markets will be on the lookout for any additional action that could cement a floor in crude prices, which at the moment is proving a challenge. The lingering Israeli-Palestinian situation remains an elephant in the room, certainly after the seizing of a tanker in the Strait of Hormuz by Iran-backed Houthi rebels.
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 Oil prices back up again.