Next, the market focus will shift to OPEC+ that will hold a ministerial panel
Oil prices plunged on Monday on the rallying dollar and profit-taking that took place after a jump to fresh November highs around $97.70. Brent crude fell below $90 to find support in the $88.75 area before bouncing slightly on Tuesday. Now, the $90 figure is in the market focus as a failure to hold above this level could bring more selling pressure in the near term.
The market is pressured by a strong dollar, inflationary concerns and demand worries as global outlook is deteriorating. The latest reason behind a jump in the dollar is the news that the federal government avoided a shutdown. Also, it becomes increasingly likely that the Fed will maintain higher interest rates further into the future.
Adding to market worries, the World Bank pointed to a slower Chinese growth, which could crimp demand for oil. The World Bank forecast China’s growth at 5.1% for 2023, representing a slowing growth pace since April.
Next, the market focus will shift to OPEC+ that will hold a ministerial panel that will take place on Wednesday. During the event, Saudi Arabia and Russia could confirm that they will maintain their voluntarily output cut. In this scenario, Brent crude may jump on the headlines and thus erase recent losses that were mainly driven by profit-taking in combination with above-mentioned drivers.
Technically, oil could resume the ascent after some hesitation, with the overall trend staying bullish since late June. The immediate upside target now arrives around $91, followed by the $91.50 zone on the way towards the $93 figure. Once the price is above this barrier, the nearly one-year highs will come back into the market focus. On the downside, another slide below $90 would open the way to deeper losses towards $88.