It was another volatile week for oil as we tested the $85 per barrel price level I outlined in my previous post but falling just short at $84.88 per barrel before closing at $81.27. However, once again as in the previous week we saw the buyers step in on good volume and driving the price of the lows to close the session with a Doji candle of indecision, but one with a deeper wick to the lower body than the upper, thereby signaling the big operators remain in control for the time being.
In early trading, we have seen oil recover and push above the $82 per barrel level to trade at $82.45 per barrel at the time of writing. The primary drivers for last week’s price volatility last were twofold.
First, the weekly oil inventories came in worse than expected with a build of 3.3m bbls against a forecast of 1.9m bbls, a build for the second week in a row. This data was followed the day after by the OPEC-JMMC meeting at which the main point was confirmation of the production adjustment plan of the 19th OPEC meeting but more importantly to adjust upwards, the monthly overall production by 0.4 mb/d for the month of December 2021 with the 23rd OPEC and non-OPEC meetings scheduled for Dec. 2. As markets absorbed the data and news the price pulled back but the momentum for oil remains bullish and it is the $85 per barrel level which remains firmly on the horizon in the short term.