The alliance is expected to consider additional production cuts
Oil prices extended gains at the start of the week to add more than 2% on Monday. Brent crude peaked just below the $83 handle to retreat towards $82 at the close. Today, the futures came under some selling pressure, holding below the $82 figure in anticipation of fresh drivers.
The overall risk demand has abated since yesterday’s rally in Wall Street as investors turned more cautious in anticipation of minutes of the Federal Reserve’s last meeting to gauge which way the central bank is headed with interest rates. Fed funds futures pricing data suggests a nearly 100% probability that the Fed will leave rates unchanged at its upcoming December meeting.
Oil traders also shift their focus towards this weekend’s OPEC+ meeting, where the alliance is expected to consider additional production cuts. If the group does decide to scale back production again, it could push oil prices higher in the near term.
Technically, Brent crude needs to regain the $83 handle in order to see a more sustained bounce and retarget the $90 figure last seen in late October. Now, the $82 mark is in the market focus. Should the Fed express a more dovish tone later in the day, upbeat risk sentiment may push the futures north. Otherwise, the $80 psychological level could turn back into resistance, with the overall sentiment in the oil market looking fragile.
In a wider picture, oil prices look indecisive after four weeks of losses in a row, trying to attract renewed demand after the recent plunge to the $76.60 zone for the first time since early July. As such, it is very important for Brent to defend the $82 figure in the immediate term in order to attract more robust buying pressure.