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Oil prices face downward pressure as Middle East peace and US stockpile growth prompt OPEC+ concerns

EditorPollock Mondal
Published 11/22/2023, 09:22 PM
© Reuters.

Global oil markets are facing potential volatility as a combination of Middle East peace developments and a significant increase in US crude stockpiles could drive West Texas Intermediate (WTI) oil prices down to $74. The American Petroleum Institute (API) reported a substantial rise in US stockpiles, indicating increased production that may lead the Organization of the Petroleum Exporting Countries (OPEC) to consider deeper production cuts to address the surplus.

The US Dollar has strengthened following the release of the Federal Reserve's meeting minutes on Tuesday, which showed a consensus among Federal Reserve officials to maintain current interest rates. This decision is expected to lead to higher yields, further reinforcing the dollar's position in the Dollar Index (DXY). At present, WTI oil is valued at $77.36 per barrel, while Brent crude stands at $82.03 per barrel.

In light of the shortened trading week due to Thanksgiving, market participants are bracing for heightened trading volatility. Additional data from the Energy Information Administration (EIA) is anticipated to show a slight increase in crude reserves. Moreover, the Natural Gas Storage Change is projected to see an uptick of one billion cubic feet.

Technical analysis of oil prices suggests that there is resistance near the $80 mark, with potential selling pressure or profit-taking expected around $84. Conversely, support appears to be forming near a softer floor at $74. Should prices fall below this level, it may prompt OPEC+ to step in with interventions to stabilize the market.

Investors and traders are closely monitoring these developments as they could have significant implications for energy markets and broader economic conditions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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