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WTI crude oil trend analysis: EIA inventory has unexpectedly



Summary:

WTI crude oil remained strong on Wednesday (November 25), rising to an eight-and-a-half-month high of US$46.24 for six consecutive days; EIA crude oil inventories unexpectedly dropped; OPEC+ is still expected to announce its decision to postpone production increase at the next week’s meeting; the market’s meeting with the Fed The response of the minutes was flat; how to judge the oil price outlook?



EIA crude oil inventories unexpectedly dropped, and oil prices rose above US$45.0 for six consecutive years!


On Wednesday (November 25) WTI crude oil stabilized at US$45.0 and further climbed to an intraday high of US$46.24, setting a new eight-and-a-half-month high since March 6, and is expected to record four consecutive weeks of rising. Although the market has become more optimistic about the medium-term oil price market, after the oil price has risen continuously, the market has been divided on the short-term trend of oil prices.


The changes in EIA crude oil inventories announced on Wednesday (November 25) for the week ending November 20 unexpectedly fell by 754,000 barrels to 488.7 million barrels, a decrease of 0.2%. It is expected to increase by 225,000 barrels from the previous value of 769,000 barrels. Although the beautiful performance of EIA crude oil inventories offset the 3.8 million barrel increase in API crude oil inventories announced earlier, EIA gasoline inventories actually announced an increase of 2.18 million barrels, marking the second consecutive week of growth. WTI crude oil rose slightly after the data was released.


It is worth noting that with the continued promotion of vaccines, the market has begun to bet that the global economy is expected to gradually recover in the next 2-3 years. In addition to the good market risk sentiment in the recent period, oil prices have started a round of rising prices. . However, it should be noted that the number of infections in Europe and the United States has not yet seen a clear peak. On Wednesday (November 25), German Chancellor Angela Merkel stated that Germany will extend some of the blockade measures to December 20. At the same time, financial assistance measures will also be extended to December; European Commission President Von der Lein warned that loosening control measures too quickly and too much may lead to a third wave of epidemics.


In addition, the mixed economic data overnight in the United States also reflects that its economy is still facing downward pressure from further blockades. Among them, the number of initial claims for unemployment benefits in the United States increased by 778,000 as of November 21, which exceeded expectations by 730,000, indicating that the surge in confirmed cases of new coronary pneumonia and commercial restrictions are driving layoffs and undermining the recovery of the labor market.

 


OPEC+ may still not change its decision to postpone production increase! The short-term trend of oil prices ushered in divergence?


In view of the fact that the impact of the vaccine cannot transform the epidemic in the short term, the International Energy Information Agency (IEA) also lowered its crude oil demand forecast in its monthly report published earlier, and lowered its 2020 global crude oil demand forecast by 400,000 barrels per day; 2021 Will increase slightly by 200,000 barrels per day. In this case, the OPEC+ ministerial meeting to be held from November 30 to December 1 next week is particularly important.



According to news on Wednesday (November 25), OPEC+ is still inclined to extend the current production cut plan for three to six months at the next meeting, and the market generally believes that the best option is to extend it for another three months. However, the author reminds that what decision OPEC+ makes still needs to be reserved. On the one hand, the UAE has previously stated that it will withdraw from OPEC+, implying that member states are dissatisfied with the delayed increase in production, which is detrimental to OPEC+'s long-term delay in increasing production and even further measures to reduce production. On the other hand, once oil prices climb too fast and return to above US$50.0, the U.S. shale oil production may rebound rapidly, which is not conducive to balancing the oil market.



From Wednesday (November 25) to November 27, the total number of oil rigs in the United States increased to 241, an increase of 10 from the previous value of 231. The U.S. drilling company increased oil and gas drilling for the fourth consecutive month. Once OPEC+'s efforts to restrict supply are not as strong as market expectations, oil prices may fall under pressure.



Investors can pay attention to the ECB's announcement of the minutes of its October monetary policy meeting. In addition, because the New York Stock Exchange is closed for one day during the Thanksgiving holiday, and the trading of energy contracts will also end ahead of schedule at 02:00 on November 27, Beijing time, we need to be wary of the possibility that the decline in liquidity will increase the volatility of oil prices.

 


WTI Crude Oil: The short-term trend is facing callback pressure, but the overall upward trend is difficult to change


WTI crude oil daily chart:


The daily chart shows that the mid-term uptrend of oil prices is continuing, which marks that the November 2nd hitting $34.09 has become a staged bottom. From the current situation, the reversal since $34.09 is still far from over. At that time, the medium-term prospects for oil prices tended to be optimistic.


However, the RSI falling into overbought and rising above 70 needs to attract investors' attention, which may cause the short-term trend of WTI crude oil to turn into high shocks. The market outlook can focus on the support of the 43.0-44.0 USD area. Once the above area is effectively stabilized, the medium-term upward challenge is still expected 46.0 US dollars or even 50.0 US dollars level.


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