OPEC tries hard to push the oil price higher but unsuccessfully

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In the past two months, there were several exciting trading opportunities in the oil market amid speculation about the United States seeking to refill its Strategic Petroleum Reserves (SPR) and OPEC taunting more production cuts to propel the oil price higher. However, despite much of the talk among U.S. officials, the SPR continued to be drawn, with the crude oil stock being reported at 351.69 million barrels on 9th June 2023. Furthermore, against the wishes and actions of OPEC, the oil price failed to rise significantly. Though, this story has been playing out for much longer than just in the past two months. The cartel agreed to slash production by 2 million barrels per day starting in November 2022, then extended cuts in early 2023, and most recently, Saudi Arabia (the second largest oil producer in the world) announced a voluntary cut of 1 million barrels per day starting in July 2023. As a result, Saudi Arabia’s oil production is estimated to amount to approximately 9 million barrels per day by the end of July 2023. That would represent about a 17% decline in the country’s output versus August 2022 level of production (when it stood at 10.9 million barrels per day); as for the entire organization, its output fell from nearly 29.4 million barrels per day in the third quarter of 2022 to only slightly more than 28 million barrels per day in May 2023 (representing approximately 4.7% decline in the period). In the meantime, U.S. field oil production kept growing, from 12 million barrels per day in August 2022 to almost 12.7 million barrels per day in March 2023, amounting to about a 5.8% increase (and 11.7% growth since January 2022). So, it seems that regardless of how hard OPEC is trying to push the price higher, the United States just reverts to releasing more petroleum reserves or ramping up production to offset the cartel’s ambitions.

Illustration 1.01

Illustration 1.01 displays the daily chart of USOIL and simple support/resistance levels.

Technical analysis
Daily time frame = Neutral/Slightly bullish
Weekly time frame = Neutral

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註釋

As for our view on the tradeable action, we prefer to stay on the sidelines at the moment.