Oil Price Talking Points
Crude climbs to a fresh monthly high ($47.74) despite an unexpected increase in US inventories, and the price of oil[1] may continue to retrace the decline resulting from the COVID-19 pandemic as tracks the upward trend established in November.
Oil Price Rally Eyes March High as RSI Flirts with Overbought Zone
The price of oil approaches the March high ($48.66) as the Organization of the Petroleum Exporting Countries (OPEC) reveal that “beginning in January 2021, DoC (Declaration of Cooperation) participating countries decided to voluntary adjust production by 0.5 mb/d from 7.7 mb/d to 7.2 mb/d” at its last meeting for 2020.
It seems as though OPEC and its allies will continue to regulate the energy market in the year ahead as the group “agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 to assess market conditions and decide on further production adjustments for the following month,” and signs of subdued supply may keep crude prices afloat amid the tepid recovery in US production.
Even though the latest figures from the Energy Information Energy (EIA) showed US crude inventories increasing 15.189M in the week ending December 4, field production held steady for the second consecutive week, with output sitting at 11,100K during the same period.
In turn, the price of oil appears to be on track to test the March high ($48.66) as US production remains at its lowest level since 2018, and the ongoing efforts by OPEC+ may continue to act as a backstop for crude as it preserves the upward trend established in November.
At the same time, the Relative Strength Index (RSI) highlights a similar dynamic as the oscillator breaks out of the downward trend carried over from June, and the indicator may continue to offer a
