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