WTI Crude Oil Market Outlook - High expectations end up with low prices

Since Monday, we are seeing Oil prices attempting to stabilize or even make a rebound, as the drop from last week was quite significant, pushing the commodity’s worth even lower.

Yesterday, a very important meeting in Brussels took place, as the EU officials had a sit down with the Iranian Nuclear chief, with the talks referring to the 2015 nuclear deal.

It is said through various reports that the two sides could be looking to keep the current agreement in place despite the US rejecting it.

The two sides, EU and Iran, could be aiming to either modify or improve the current deal, which can also be understood as, Europe being in favor of remaining in the pact.

Iran’s officials warned in case of the deal not being kept as initially signed, and stated a turmoil could be unleashed, in such a case.

During the meeting, the Persians namely referred to Russia and China including the Europeans, urging them to keep the deal.

Moreover, the Persians are set to meet in Moscow with the Russians, before the end of November, in a meeting which could be aimed towards discussing the current nuclear deal or even a way to outmaneuver US sanctions.

Here, we would like to stress the importance of these meetings taking place prior to OPEC’s December 6th conference in Vienna, and could be a way to improve communication between the Oil producers.

It’s important for communication to take place but we are conservative towards major changes in circumstances, as Middle East countries could be intransigent towards Persia.

During the past weekend, various reports publicized that Saudi Oil Giant Aramco is signing a number of 30 new deals worth approximately 25 billion USD with domestic but also international companies.

The Saudi firm is comfortable expanding and displaying its dominance in the Oil world, with Commodity followers patiently awaiting its IPO date to be announced.

Furthermore, yesterday it was confirmed that Saudi Arabia raised oil production to an all-time high in November.

In the Upcoming meeting in Vienna, OPEC could be looking to take actions towards restraining supply in order to rebalance the Oil market.

On other news, China’s crude oil imports from Russia jumped over 50 percent during October, compared to last year reaching an all-time high of 1.73 million bpd.

This in our opinion, could be an indication of what is to follow, as the mainland could be leaning towards Russia, to cover for any supply shortage.

It must be noted that imports from the Saudi kingdom have also increase but in the contrary have decreased from Iran.

In the North Sea, a sea found between the United Kingdom and Scandinavian Countries, British Petroleum has started producing Oil setting a target of 120K bpd.

The very popular Clair Ridge field, was initially found back in the 70s and is now considered a very promising Oil field which could boost supply and compete with other fields.

However the specific area is undertaken by difficult weather conditions setting some barriers for production to take place.

In addition, OPEC producers as well as North American oil producers could be looking to modify their budgets or indirectly introduce new ways to set them up.

This was due to the fact that traditionally Oil producing budgets were set according to Oil price levels.

In more detail, if Oil prices were high, budgets would increase, while when Oil prices dropped budgets had to be reduced.

Now as uncertainty remains the main characteristic of the Oil market, moving into 2019, producers may be forced to change their approach towards the funds allocated for the year ahead.

Cost reductions could be set in place, but also limits in budget increases could be the key to overcome potential losses.

Budgets set too high could be hurtful for economies and business according to various analysts and should be controlled to be in line with actual production and not forecasts

Crude Oil 1 Hour chart

At the moment, the black gold seems to be stable keeping the trading activity between our (R1) 53.45 resistance level and the (S1) 50.00 support level.

In case the commodity moves in a bearish trend we could see it moving towards the (S1) 50.00 support level and even breaching it heading for the (S2) 48.00 support level.

If the bearish trend persists we may see Crude Oil moving towards the (S3) 46.15 support level.

Please note, our support levels (S2) & (S3) are based on price action which occurred more than 1 year ago.

If crude Oil is undertaken by a bullish sentiment, we may see it move upward for the (R1) 53.45 resistance level and head even higher for the (R2) 55.30 resistance barrier.

In case the (R2) level is breached we may see the commodity rise to the (R3) 57.45 resistance level.