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OPEC+ still has a positive outlook for growth in oil demand, despite the headwinds faced by the global economy, as it prepares for its next ministerial meeting.

Oil Demand Growth

OPEC+ still has a positive outlook for oil demand growth, despite the headwinds faced by the global economy, as it prepares for its next ministerial meeting.

“The economy, despite the challenges, is still doing quite well,” OPEC Secretary-General Haitham Al-Ghais said at the Argus European Crude Conference in London on Tuesday. “We are positive on demand, we’re still quite robust on demand.”

oil-demand-growth-opec-december-7-2018-reuters

Has Expressed Uncertainty

The top official at the Organization of Petroleum Exporting Countries (OPEC) has expressed uncertainty regarding the outcome of the group’s upcoming ministerial meeting, scheduled to take place in the final weekend of November. In a press statement, the official emphasized that it would be premature to make any definitive predictions or preempt the decisions that will be made during the meeting. This uncertainty regarding the outcome of the ministerial meeting reflects the complex and ever-evolving dynamics of the global oil market and the diverse interests of OPEC member countries.

Highlights the Organization’s Commitment

The statement made by the top OPEC official highlights the organization’s commitment to a consultative and consensus-driven decision-making process. OPEC, comprised of 13 member countries, plays a crucial role in shaping global oil prices and supply levels. The ministerial meetings serve as a platform for member countries to discuss and negotiate production quotas and strategies to stabilize the oil market. As such, these meetings often involve extensive deliberations and negotiations to reach a consensus that accommodates the interests of all member nations. Therefore, the official’s cautious approach in refraining from preempting the meeting’s outcome underscores the complexity and importance of the discussions that will take place amongst OPEC members.

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Source: Bloomberg

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Oil rose 1.4% after three weeks of declines set the stage for a relief rally. West Texas Intermediate settled above $78 a barrel Monday.

Oil rose 1.4% after three weeks of declines setting the oil stages relief rally.

Oil prices experienced a notable recovery, surging by 1.4%, following a string of three consecutive weeks of declines. This upward movement in prices has sparked a sense of relief among market participants who have been closely monitoring the volatility in the oil market. The recent decline in oil prices had raised concerns and uncertainties about the future direction of the market, making this relief rally a welcomed development.

The three-week decline in oil prices was primarily driven by a combination of factors, including concerns over global economic growth, the ongoing trade tensions between major economies, and fears of a potential oversupply in the market. These factors had created a bearish sentiment, leading to a downward pressure on oil prices. However, the recent rally suggests that market sentiment is shifting, as investors are hopeful that the worst of the decline may be behind us.

The Positive sentiment in global equity markets

It is worth noting that the relief rally in oil prices is also supported by broader market dynamics. The positive sentiment in global equity markets, driven by a series of positive economic data and central bank stimulus measures, has contributed to the rebound in oil prices. Additionally, recent geopolitical developments, such as the easing of tensions in certain key regions, have also played a role in boosting investor confidence in the oil market.

Looking ahead, market participants will closely monitor key factors that could impact the future trajectory of oil prices. The ongoing trade negotiations between the United States and China, as well as developments in major oil-producing nations like Saudi Arabia and Russia, will be closely watched for any potential impact on oil supply and demand dynamics. Furthermore, any shifts in global economic growth expectations could also have a significant influence on oil prices.

Following three weeks of declines has provided a sense of relief for market participants. The rally supports positive sentiment in global equity markets, and geopolitical developments. There are hopes of a resolution to key trade tensions. However, the future direction of oil prices remains uncertain. This is as investors continue to monitor various factors that could influence market dynamics.

Weakening Demand Outlook

West Texas Intermediate settled above $78 a barrel Monday, snapping a rout that saw oil plummet more than 13%. A weakening demand outlook and rising US supplies continue to weigh on the market. With that, technical signals suggest the recent sell-off was overdone. Moreover, OPEC on Monday reiterated its view that global supply balances are tight and consumption healthy. As a result, this will be supporting prices alongside a weaker dollar.

“The futures market appears oversold,” RBC Capital Markets analysts including Michael Tran wrote in a note. Yet he cautioned that this rally may be short-lived. This is with investors persistently on edge about demand given stubbornly high US interest rates.

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Source: Bloomberg

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