Economic data was disappointing, but Powell's speech increased the sentiments
OPEC meeting will start today, December first to set policy and the amount of output and supply. And then on the second day, they will make the final decision in consultation with non-member allies, called OPEC+. This is while the weak economic prospects and geopolitical tensions have cast a shadow on all decisions. Market participants are waiting to see another cut in output to control the prices.
In terms of economic data, the economic confidence index in the Eurozone rebounded more than expected in November, improving for the first time since February. Earlier, the European Central Bank warned that it may be forced to continue to raise interest rates due to high inflation, which led to a slight rebound in the euro. In addition, November's industrial climate index in the Eurozone recorded a new low since January last year, at -2. On the other hand, Germany’s initial monthly CPI rate recorded -0.5% in November, the lowest since November 2020. The data may provide the possibility for the European Central Bank to slow down the pace of interest rate hikes.
In China, while protests in recent days increased hopes of some changes in the government's ultra-strict Covid control policies, weaker-than-expected PMI numbers in both private and official sectors eased the hopes of reaching the growth target of the second-largest global economy, which means less Oil demand expectations as well.
In the week ending November 25, US inventories experienced one of the biggest declines in history. On Tuesday, the American Petroleum Institute (API) reported 7.85 million barrels fell in the US inventory levels of oil, gasoline, and distillates. And the next day, on Wednesday, the US Energy Information Administration (EIA) also reported a sharp decline of -12.580M barrels in the number of barrels of commercial crude oil held by US firms. These reports together show one of the biggest falls in the US oil and product inventories in history.
So, while today the OPEC meeting starts, the latest rumors suggest that the group may keep production unchanged or decrease it only 500 barrels bar day to show how carefully they are watching the market changes. We also should not forget that the day after the OPEC+ meeting, the European Union's embargo on Russian crude oil imports will also come into force.
From a technical point of view, a downtrend ended, but the uptrend needs to be breath above $83. On the flip side, the inability to cross above $83 can still return the risk of a sharp decrease.
