Brent Crude has Now Slumped to its Lowest Since January 2022

Brent Crude

Brent Crude Oil Prices have Hit a 10-Month Low on the OPEC+ Production Boost Report.

Compared to early January, brent crude oil prices dipped to their lowest following the report by Wall Street Journal stating that Saudi Arabia and other OPEC oil producers are debating an increase in output.

For January, Brent crude futures declined by 4.7 percent, or USD 4.07, to USD 83.55/barrel by 1518 GMT.

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For December, the U.S. West Texas Intermediate (WTI) crude futures were lower by 5 percent or USD 4.02, at USD 76.06 ahead of the expiration of the contract on Monday. The January contract, which is more active, was down by 4.8 percent or USD 3.82 at USD 76.29.

In the OPEC+ meeting, which will be held on December 4, a rise of around 500,000 barrels each day (bpd) will be discussed.

OPEC+ (Organization of the Petroleum Exporting Countries), together with its allies, just cut their production targets. Saudi Arabia's de facto leader, energy minister, stated this month that the group would remain alert.

At the same time, fear regarding supply has reduced chiefly, whereas the worries over the strengthening U.S. dollar weighing on prices and Chinese fuel demand continue.

The anticipation of additional increases in interest rates has boosted the greenback, making commodities which are more dollar-denominated expensive for investors.

Tina Teng, a CMC Markets analyst, stated that aside from the sluggish demand outlook as a result of China's COVID-19 curbs, the dollar rebounded in the U.S., which also presented itself as a negative factor for oil prices.

Additionally, she stated that the risk sentiment evolves to be fragile since all the latest significant nation's economic data translates to a recessionary scenario, particularly in the U.K. and the E.U. zone. Furthermore, last week's hawkish remarks by the U.S. Federal Reserve also triggered worries about the economic outlook in the U.S.

In China, new cases of COVID-19 stayed near April highs as the nation fights the outbreak on a national scale.

The front-month futures for brent crude spread constricted the previous week sharply. In contrast, the WTI converted into contango (future prices are higher than spot prices), depicting declining supply concerns. This means that in future there will be a supply issue.

West Texas Intermediate (WTI) Price Analysis: Technical Outlook

According to the WTI daily chart, oil prices fell short of the 2022 YTD low of roughly USD 74.30 PB and are anticipating a recovery of almost USD 80.00 PB. It should be noted that the price movement on Monday produced a significant hammer candlestick, which hinted at the possibility of a rise in WTI in the near future, but only after buyers recoup USD 80.00.

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If the cards are in the proper place, WTI's initial resistance will be the swing low that turned into resistance on October 18 at USD 82.10, followed by the 50-day Exponential Moving Average (EMA) at USD 85.72 and the 100-day EMA at USD 89.51. On the other hand, the crucial WTI support levels are the YTD low of USD 74.30, the swing low of USD 75.30 from November 21 and the daily low of USD 76.28 from September 26.

According to Procurement Resource, there is a recent dip in oil prices to their lowest since January 2022. Following the report, OPEC+ (Organization of the Petroleum Exporting Countries), together with its allies, have cut their production targets. The organisation is in discussion to increase its output by around 500,000 barrels each day (bpd).

In the meantime, though the supply fear has reduced, the anxiety over the strengthening U.S. dollar weighing on prices and Chinese fuel demand is on the rise. Due to the additional increases in interest rates, commodities that are more dollar-denominated have become expensive for investors.

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