The OPEC+ meetings taking place in Vienna are scheduled to span the entire day of Wednesday, July 5, 2023. This will provide insights regarding the influence of decisions taken in the energy markets and oil production.
Previous OPEC+ Meetings Brief
The last OPEC+ Meeting was held on Wednesday, June 29, 2022. At its last gathering in early June, OPEC+ decided to raise output each month by 648,000 barrels per day (bpd) in July and August, compared with a previous plan to add 432,000 bpd over three months. (sourced by Reuters June 29, 2022)
However, in the latest OPEC-JMMC meetings on Sunday, June 4, 2023, the OPEC+ producers decided to cut oil production until the end of 2024.
Saudi Arabia is heavily dependent on oil revenue, and has been making efforts to increase or maintain oil prices. However, concerns have arisen as global economic conditions have led prices to fall below $80 per barrel.
On Monday, July 3, 2023, the two largest oil exporters, Saudi Arabia and Russia announced the implementation of oil production cuts throughout the month of August.
Saudi Arabia has declared to extend its reduction of 1 million barrels per day in oil production while Russia will cut oil exports by 500,000 barrels per day.
As per the above information, further increases in oil prices could be expected.
Figure 1: West Texas Intermediate Crude OIL (WTI), Weekly Timeframe, Tradingview.com, 2020-2023
Since its major drop after Covid-19 in April 2020, WTI continued its bullish momentum reaching a price of $120 per barrel. However, on June 29 2022, following the OPEC meetings which announced an increase in the oil output, crude prices declined and continued toward its 1 year low of $64.12 per barrel (Figure 1).
Plotting a Fibonacci retracement on the following points, we notice that in the current rejections of WTI prices, it also happens to be the 50% Fibonacci retracement level which is acting as the last savior for the price (Figure 1).
Following the latest production cut news from the two biggest exporters, crude oil could reach the price of $83 per barrel, which also happens to be the 38.7% Fibonacci retracement level.
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