Daily Market Recap – USOIL Confusion after the aborted Opec meeting

WTI crude oil prices fell sharply Tuesday on doubts about OPEC+'s cohesion after the cartel's meeting ended in confusion Monday.

The outcome of Monday's OPEC+ meeting was initially seen as positive because OPEC+ will leave its production level unchanged in August rather than implement the planned 400,000 barrel per day production increase.

However, OPEC+ negotiations continue behind the scenes, with Russia and Saudi Arabia likely to eventually get the production increase they want. On Tuesday, oil prices fell on the idea that OPEC+ will eventually increase production, either as part of a deal to raise output or in the mess that would leave each country to decide to open the taps without consultation.

The United Arab Emirates rejected the preliminary OPEC+ agreement to increase production by 400,000 barrels each month from August to December, as it wants a higher production quota to go with its increased capacity.

However, Saudi Arabia does not want to give the UAE a higher production quota, as this could lead to a slippery slope where all OPEC+ members would start demanding higher production levels.

Oil prices were also weakened on Tuesday by a stronger dollar and a drop in the June ISM services index in the U.S. by -3.9 points to 60.1, which was much weaker than expectations of a -0.5 point drop to 63.5. Also add in concerns about demand from the Delta variant.

Black gold prices were rejected by the resistance that corresponds to the high of 2018. Yesterday's candlestick ends a strong uptrend and encompasses 4 sessions, which is a negative factor. However above the 34-period moving average it is only a breather and the medium-term trend remains positive.

(Chart Source: Tradingview 07.07.2021)

Below the 34-period moving average a more significant correction could take place towards the support zone formed by the psychological level of USD 70 and the last low at USD 68.58.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.