OPEC+ Output Cuts Extended Amid Demand Concerns; Oil Prices Face Pressure

Oil prices edged lower on Friday, with Brent crude poised for a weekly loss of over 1%, while WTI clung to a marginal 0.1% gain.

The OPEC+ alliance, which produces about half of the world’s oil, announced on Thursday it would delay planned output increases by three months to April 2025 and extend its deeper production cuts until the end of 2026.

This decision comes amidst sluggish global demand, particularly from China, and rising output from non-OPEC producers. Previously, OPEC+ planned to start unwinding cuts in October 2024, but weaker-than-expected consumption and rising production elsewhere have forced the group to revise its strategy repeatedly.

Market Outlook: Weak Demand and Oversupply Loom

Oil market sentiment remains bearish despite OPEC+’s moves. Analysts at Phillip Nova noted that recent U.S. crude stockpile drawdowns and a softer dollar have failed to lift prices.

“Global demand concerns for 2025 are dampening sentiment, even as the U.S. dollar weakens,” said Priyanka Sachdeva, Senior Market Analyst.

Energy consultancy FGE highlighted that OPEC+ output is now below earlier projections by major banks, potentially offering medium-term price support.

However, Macquarie analysts projected an oversupplied market in 2025, estimating a surplus exceeding 1 million barrels per day (bpd). “Non-OPEC supply growth will likely meet below-trend demand, reducing the call on OPEC+ and limiting reversals of voluntary cuts,” their note said.

Key Economic Indicators: Fed’s Next Move in Focus

Traders are closely watching Friday’s U.S. nonfarm payrolls report, with forecasts suggesting 200,000 new jobs in November. The CME FedWatch tool indicates a 72% probability of a 25-basis-point rate cut at the Federal Reserve’s December meeting, up from 66.5% a week earlier.

A clearer rate trajectory could influence 2025 demand forecasts. “The upcoming Fed meeting may provide clarity on rate cuts, shaping oil demand outlooks,” added Sachdeva.

Key Points:

• OPEC+ Cuts Extended: Output rises postponed to 2025; deep cuts extended to 2026.

• Market Outlook: Oversupply in 2025 expected, with a 1M+ bpd surplus projected.

• Fed Watch: December rate cut expectations rise, adding uncertainty to demand forecasts.

Daily Technical Outlook: WTI Crude Oil – December 6, 2024

WTI Crude Oil is trading at $68.25, recovering modestly after testing key support levels. The pivot point at $68.92 is critical for short-term direction. Immediate resistance is seen at $69.70, with subsequent levels at $70.50 and $71.28.

On the downside, immediate support is positioned at $67.70, followed by $67.09 and $66.59.

The Relative Strength Index (RSI) at 43.43 suggests mild bearish momentum but signals the potential for consolidation. The 50-day EMA at $68.85 aligns with the pivot, emphasizing this level as a significant inflection point.

A break above $68.92 could reignite bullish sentiment, targeting $69.70, while a sustained move below $67.70 might prompt further declines.