Crude Oil Week Ahead: OPEC Meeting, NFP, and ISM PMI

Article Outline

• Key Events: OPEC Meeting, ISM PMIs, and NFP
• Technical Analysis: USOIL 3-Day Time Frame

OPEC Meeting in light of Trump’s Policies

The first OPEC meeting of 2025 is set for Monday, with markets widely expecting the organization to extend its December decision to maintain production cuts. However, similar to all 2025 economic decisions, the Trump factor remains a critical variable. Trump's policies introduce two key risks for oil markets:

Supply Shortages – Potential sanctions on Russian or Iranian oil could restrict supply.

Oversupply Risks – A push for aggressive drilling and domestic production in the US could flood the market.

Both risks could significantly impact OPEC’s strategy, much like the economic slowdown in China in 2024, which pressured OPEC to maintain its production cut quotas.

ISM PMI and US Non-Farm Payrolls

This week’s economic calendar includes key growth indicators from the US and China, alongside Friday’s US NFP report.

• The US ISM Manufacturing PMI, due Monday, stands at 49.3, near a 10-month high but still below the expansion threshold of 50.

• The US ISM Services PMI, due Wednesday, is at 54, firmly in expansion territory, though it poses slight inflationary risks.

• The Chinese Caixin Manufacturing PMI, due Monday, hovers at 50.5, signaling borderline expansion.

• The Chinese Caixin Services PMI, due Tuesday, remains in stronger expansion territory at 52.2.

These indicators provide early insights into economic growth trends and oil demand potential. Meanwhile, Friday’s NFP report could influence US monetary policy expectations, introducing broader market volatility risks. The latest NFP report surged to an 8-month high, adding 256K jobs, further intensifying inflation concerns alongside potential Trump policy shifts.

Technical Analysis: Quantifying Uncertainties

Crude Oil Week Ahead: 3-Day Time Frame – Log Scale

Source: Tradingview

After declining from the $80 highs, crude oil rebounded from the $72 zone, which corresponds to the upper boundary of the trading range observed between October and December 2024.

Support Levels: A break below $72 could open the door for declines toward $70, $68, and the critical $64 support zone (a 4-year low). If $64 fails, oil could plunge further, targeting $55 and $49, aligning with the 0.618 Fibonacci retracement of the 2020-2022 uptrend.

Resistance Levels: Although bearish momentum dominates, a break back above $78 and $80 could signal recovery, extending gains to $84 and $89.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

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