The price of crude oil rose more than one per cent on the first trading day of the New Year ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC) with its allies, known as OPEC+, held on Tuesday to discuss production policy.
Bloomberg on Monday reported that OPEC had lowered its estimate of the surplus in global oil markets this quarter, the day before OPEC+ considered another output boost.
“OPEC sees a surplus of 1.4 million barrels a day in the first three months of 2022, down 25 per cent from its estimates a month ago, according to research being reviewed by OPEC+ on Monday.
“The main driver of the change was a weaker outlook for supply from the coalition’s rivals.
“The overall picture for 2022 is also slightly stronger as a result of a more robust demand outlook, with an average full-year surplus of 1.4 million barrels a day instead of the 1.7 million seen by the committee last month.
“The report, compiled by OPEC’s internal research department in Vienna, is being assessed by the alliance’s Joint Technical Committee on behalf of ministers,” reported Bloomberg.
However, it added that such efforts by OPEC+ could be hampered by any disruption to Libyan output, and the north African supplier “expects its output to fall by another 200,000 barrels a day over the next week as workers try to fix a damaged pipeline”.
Bloomberg reported: “Libya’s state-owned National Oil Corp said late Saturday that the main pipeline linking the eastern Samah and Dhuhra fields to the country’s biggest export terminal, Es Sider, will be shut for maintenance. It said the pipe will be working again in a week.”
Technically, the price of oil is in a second bullish swing high, with a December of $77. In an hourly timeframe, oil is being traded at near 50-day moving averages of $75, with a 200-day moving average of $74.5.
For this week’s trading recommendation, oil could be traded in the range of $75 to $80. Alternatively, investors could consider placing a trading position by entering the market at $74, putting a stop-loss function at $72 and a take-profit 1 at $77, or a take-profit 2 at $80.