Crude oil markets are experiencing a notable uptick as traders anticipate the outcome of the OPEC+ meeting scheduled for December 5, 2024. The coalition is expected to extend its production cuts into the first quarter of 2024, with improved compliance from key producers like Russia and Iraq. This potential extension is fueling optimism among traders, pushing crude oil futures near a critical resistance level of $69.11. However, the market faces significant headwinds, including technical barriers such as the 200-day moving average at $73.02, which could challenge further price increases. Additionally, geopolitical risks and Federal Reserve rate decisions are adding layers of complexity to the market dynamics.
Despite the short-term optimism, broader market concerns persist, particularly regarding global demand. China's crude import growth is projected to plateau, and Saudi Arabia is reportedly planning to cut prices for Asian buyers to the lowest levels in four years, indicating weak regional demand. These factors, combined with geopolitical tensions in the Middle East and uncertainties surrounding U.S. Federal Reserve policies, contribute to a cautious market outlook. The potential for an oil market surplus continues to exert downward pressure on prices, with Brent crude trading nearly 6% below its average for December 2023.
The ProShares UltraShort Bloomberg Crude Oil ETF (SCO) is down 3.13% in pre-market hours on Tuesday, December 3, falling to $17.97 as of 8:17 AM ET.