Biden in Saudi Arabia
Last month, the president of the USA, Joe Biden, visited Saudi Arabia. The primary intent was to persuade Saudis to boost oil production and cool the price of commodities. OPEC+ meeting is a planned on Wednesday and everyone is waiting for the production numbers. Moreover, it will tell whether it paid off.
The July numbers show that crude oil export from Saudi Arabia rose to the highest level since 2020. It is obvious that this intention is to fight high prices. Based on data from Bloomberg, seaborne shipments were at 7.5 million barrels on the last day of July in comparison with 6.6 million barrels in June. Moreover, more crude is exported to Europe by Sumed pipeline across Egypt. The export soared since the war in Ukraine.
OPEC+ on Wednesday
The highly awaited OPEC+ meeting is planned for Wednesday. All eyes will be on the production numbers. The question is, is OPEC going to pump more crude oil above the plan or not? The plan of boosting production, which was planned a year ago counts to 400 000 barrels. This will be no surprise and probably will not have a significant impact on the price of a black commodity. Moreover, Biden’s visit to Saudi Arabia will be considered a defeat. On the other hand, higher than expected numbers will bring a sign of willingness to fight with the price around 100$ price tag.
Price vs. volume
The chart below shows how the price of CL (Crude Oil Futures) stands in comparison with the volume since the beginning of 2021. The tight market thanks to the Covid situation, and crude was raising from historic lows back to 80-90$ area. Then Russia invaded Ukraine and the price spiked to 120$. After several ups and downs, the price of CL oscillates around the 100$ level. The yellow line represents EMA 200 (Exponential moving average counting from the last 200 days). It is clearly visible that this quite strong technical indicator shows a support level at 88.21$ and the price is slowly testing this level.
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The 2-year volume histogram shows the highest volume of a commodity in the area from 45-75$. That means, that any break under the yellow line could spark a sell-off to the level of 75$. But there are a lot of external factors. It is not just the OPEC decision. For example, market tightness or Libya’s situation could have an impact on the price.
The daily chart of CL (Crude Oil Futures), Price vs. volume. Source: Author’s analysis
Libya is out of production ban
Libya’s crude oil output is raising. Libya had a ban on the shipments of its crude oil, which helped to tighten global supply. But based on the latest data, shipments doubled from 589 000 barrels to 1.2 million barrels on July 15th. This could help OPEC to fulfil its production target and cool the price of commodity. Therefore, the meeting of The Organization of Petroleum-Exporting Countries and its allies will be very important for the next course for the price of crude oil.