Don’t waste your time – keep track of how NFP affects the US dollar!
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Personal areaOPEC will hold a meeting on March 4, where it should announce its decision on further oil output. Since oil prices have rebounded recently, OPEC members may start slowly increasing the crude production. Oil prices returned to the pre-pandemic levels and settled at fresh 13-month highs.
Saudi Arabia and Russia have opposite views about the oil market. While Saudi Arabia’s side urge to be “extremely cautious,” despite prices rebounding, Russia signals its intentions to raise oil output.
These days, OPEC members are withholding 7 million barrels a day from the market, about 7% of worldwide production. For such countries as Iraq and Nigeria, it's a real sacrifice as it causes economic problems as exports drop. However, it helped to boost oil prices to the current levels.
Investors should focus on two crucial decisions. Firstly, OPEC members have to decide whether to increase output by as much as 500 000 barrels a day or not. They have already discussed it in December, but rejected this idea at the January meeting. Secondly, Saudi Arabia claimed it might cut 1 million barrels a day in any case on a voluntary bias in February and March. The final decision will be made at the meeting.
According to Rystad Energy AS, “the elephant in the room is Saudi Arabia’s gift of 1 million barrels a day in extra cuts. If the gift is snatched back, prices cannot do else but decline.”
Brent oil is getting closer to the key psychological mark of $70.00. It’s unlikely to break it on the first try, but if OPEC prolongs output cuts, Brent oil may rally up above this resistance to the high of May 2019 at $73.00. In the opposite scenario, the increase of oil output will press oil prices down. If Brent drops below the recent low of $62.00, it may fall further to the 200-weekly moving average at $59.00.
Notice that to trade Brent oil with FBS, you can use the XBRUSD instrument.
