OPEC+ Delays Oil Output Hike Until April,What It Means For Oil Price

Ivan_Gan
12-10

Last week, the non-farm data of the United States was released. As suggested by last week's article, the market's attention is not on the economic data of the past two months, but more on the effectiveness of Trump's economic policies after he took office.

Therefore, the market performance was relatively flat last week, and the U.S. stock index hit a new high tepid. It is estimated that the pace of the Fed's interest rate cut has not changed much, and it is estimated that there will be a clearer trend after Trump takes office next year.

Although the price fluctuation was not large last week, for the oil market, the news announced by OPEC + is very important and needs everyone's attention. This news is that OPEC + announced that additional voluntary production cuts will be postponed for three months, and the bad news for the oil market has been delayed again.

Here is a review of the three sets of production reduction measures currently implemented by OPEC +: a "formal" production reduction of 2 million barrels per day and a "voluntary" production reduction of 1.66 million barrels per day (OPEC + confirmed that the period of these two sets of production reduction measures will be extended until the end of 2026) and an additional voluntary production reduction of 2.2 million barrels per day.

This additional voluntary production cut is shared by eight major member countries led by Saudi Arabia and Russia. It was originally scheduled to start in January 2025 and phase out the third set of "additional voluntary" production cuts of 2.2 million barrels per day within 12 months. However, due to Current oil prices, this decision will be delayed for three months.

Everyone may wonder, shouldn't it be good to delay the relaxation of production cuts? Why did oil prices still fall?

Everyone should be aware that the financial market is a market with poor expectations and reality, and it is more difficult to mobilize buyers' desire to buy goods than to realize the short-term quick response of the bad.

Since production will always increase at some point in the future, crude oil buyers will not be in a hurry to buy and stock up now, because there will definitely be no shortage and cheap in the future; On the contrary, after the implementation of the increase in production, the price fell in place, and there was no expectation of a substantial increase in production in the future. On the contrary, it attracted buyers to buy a large number of goods, thereby pushing up the price. Therefore, now OPEC has delayed increasing production for three months, which means that if there are no major events in the next three months, oil prices will rise weakly.

Technically, pay attention to the rapid decline in oil prices in a single week. Since OPEC's delay in production cuts is not a negative realization, even if oil prices fall, the process is generally a step-by-step fluctuation, that is, it falls sharply due to a certain news in the short term, then rebounds quickly, and then fluctuates in a range. It falls step by step, so everyone should pay attention to the rhythm. If the position is held for a long time, the swing will be greater. In terms of time period, the oil price has fluctuated above US $65 for 13 weeks, and it is often prone to range breakthrough fluctuations.

However, if there is no important news to cooperate with the breakthrough here, it usually fluctuates for one week, and it will often be reversed next week, so it is better to trade crude oil in the short term at present.

$NQ100 Index Main 2412 (NQmain) $$SP500 Index Main 2412 (ESmain) $$NQ100 Index Main 2412 (NQmain) $$Gold Main 2502 (GCmain) $$WTI Crude Oil Main 2501 (CLmain) $

Futures Club
Join Tiger Futures Club to know more about trading futures!
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap
Leave a comment
6