OPEC+ meeting scheduled for the end of this week supports oil prices

01 June 2023 173
OPEC+ meeting scheduled for the end of this week supports oil prices

Oil fell under pressure from China's weak demand. Lower consumption led to a drop in manufacturing activity in China. The manufacturing PMI fell to 48.8 from April’s 49.2, which is lower than forecasted 49.4. China unexpectedly lost its recovery dynamics.

 

As a result, oil prices fell to the level of $71 per barrel. Speculators started to buy at this point. As a result, oil prices rose from this level for the third time in a row in recent months!

 

This rebound took place right before the OPEC+ meeting, which might bring some good news. Speculators are taking no chances, reducing their short positions.

As the OPEC+ ministerial meeting approaches, the portfolio investors' sentiment has become a little less bearish. Funds bought 43 million barrels of oil equivalent over the past week.

According to ICE Futures Europe and the U.S. Commodity Futures Trading Commission, these were the funds' first net purchases in five weeks. During the period from April 18 to May 16, they sold nearly 250 million barrels of crude.

 

Approaching hurricane season may also be an unexpected driver for oil prices.

The National Oceanic and Atmospheric Administration (NOAA) published a forecast for this year's Atlantic hurricane season on its website.

The organization predicts 12 to 17 storms. Five to nine of those could become hurricanes.

Atlantic hurricanes seriously impacted oil and gas operations in the Gulf of Mexico in the past. For example, Hurricane Ida halted 95.65% of the region's oil production at its peak on August 29, 2021.

 

According to the technical analysis, the price of oil rebounded from its local lows on the daily timeframe. Moving to the hourly chart and drawing Fibonacci levels over the current correction, we can see that oil has overcome the first resistance - 0.236. Thus, there is a way to grow towards the next Fibonacci level - 0.382.

The price of $74 will be the growth target. A stop-loss could be placed at the level of $72.7, in case the price goes below 0.236.

 

Brent crude oil growth:

Take profit – 74.0

Stop-loss – 72.7

This content is for informational purposes only and is not intended to be investing advice.

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