Crude Oil Week Ahead: Upside Risk and Wars vs Sunday's OPEC Meeting

Key Events

OPEC Meeting Dec 1st: oil production quota revision

Russia-Ukraine War: Escalation risks ahead of a possible resolution during Trump’s term

US Economic Data: Core PCE, FOMC minutes, and prelim GDP

December 1st OPEC Meeting

OPEC members face a 2-edged sword as they come to review the production quotas on December 1st. From one hand, an output hike is critical given the weak oil demand between 2024 and 2025 alongside the alignment of prices with critical lows, affecting oil producer revenues. On the other hand, the restriction of further output can also affect revenue levels given the higher production potential of the countries.

Adding to these challenges, as Trump’s term is approaching, with his clarified power with policies, oil fracking and deregulations are set to impose steep downside risks on oil prices. These factors, combined with China’s contracting economy and the global transition to renewables, underscore the complexity of OPEC’s decision.

Wars and Upside Risks

Oil’s downtrend has been halted at is 4-year support, supported further by supply disruption risks between the Russia-Ukraine war and in the Middle East. Although ceasefire potential and resolutions are in the headlines for 2025, the cost to achieving the peace deals might not be very smooth, keeping the 64-65 price zone as a solid ground against the mentioned concerns.

Technical Analysis: Quantifying Uncertainties

Crude Oil Week Ahead: Weekly Time Frame – Log Scale

Source: Tradingview

As previously mentioned, the 4-year support zone between levels 64 and 65 remains intact, alongside upside risks from the persistent wars. The longer oil consolidates between 64 and 76, the steeper any breakout is likely to be.

The minor consolidation above the 65 support is extending shoulders.

Upside Risks: A break above resistance levels at 72.30 and 76 could pave the way for higher levels at 80 and 84, solidifying bullish scenarios on the chart.

Downside Risks: A decisive break below the 64-support could drive prices toward 58, with the potential to extend further to 49.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.