Crude Oil Price Outlook:
- Crude has followed US equities higher since early October and has retaken its 200-day moving average
- The recent OPEC meeting saw officials come to an agreement on deeper production cuts that could allow for an extension higher
- Still, a bullish continuation in the short and medium timeframes would likely require a tariff deadline extension from the United States
Crude Oil Price May Climb on OPEC Meeting Outcome if Trade War Allows
Crude oil[1] has enjoyed a bullish start to December, surging from $55.70 to nearly $60 in less than two weeks of trading. The commodity, in part, has the recent OPEC meeting to thank for the gains and the agreement established among member-nations could pave the way for a continuation higher if the demand outlook is accommodative. Beholden to the laws of supply and demand, the market has been offered relative clarity on the former following OPEC’s decision to deepen production cuts starting January 1, 2020.
The global oil-producing group and its allies announced on December 6[2] they would implement an additional production cut of 500,000 barrels a day – resulting in a total supply adjustment of 2.1 million barrels per day, of which 1.7 million is mandated. Therefore, assuming somewhat constant US supply, OPEC’s production cuts, and to a lesser extent the ongoing rail strike in Canada, the commodity may continue to crawl higher in the coming weeks if demand remains within the forecasted range.
With that in mind, crude’s price outlook becomes largely contingent on the status of the US-China trade war. With time winding down until the December 15 tariff deadline, investors are becoming increasingly apprehensive on whether the deadline with be met with an extension or if the Trump administration will impose the tariff
