A symbolic act
Two weeks ago, OPEC decreased oil production, which caused the price to skyrocket toward the $90 price tag. This happened even though the president of the USA, Joe Biden, arrived personally in Saudi Arabia to talk about the price policy. Inflation hurts the prices of crude oil and higher production of black gold could lower the price.
Related article: Crude oil’s extreme appreciation – what are the reasons?
In the last 14 days, crude oil depreciated under the level before OPEC action and hit the level of $82 per barrel. It seems that the move of the organization was a symbolic act. A symbolic act of the political game between oil’s superpowers. And Saudis showed their position.
The area of big interest
Price has fallen to the level of $82, where the negative trend has stopped for now. The development of the last several days cooled down and traded in the area of $83.50 – $87, highlighted in a blue rectangle.
Moreover, the right side of the chart below shows that this area created the highest amount of traded volume this month. This means that the interest of the institutional trades in this price range is very high.
30 minutes chart of CL (Crude Oil Futures), Monthly VWAP. Source: Author’s analysis
In addition, another strong support could be at the level of $82.85. This level is defined by the last month’s monthly VWAP (Volume weighted average price). And it can be seen that the price reacted several times on this level.
The economic outlook in China
China is a top crude importer; therefore, the long-awaited economic data greatly impact the price of crude oil. Long-awaited data, released after the communist party meeting, produced poor results. Q3 GDP showed a mixed recovery, thanks to predominantly strict Covid restrictions. The slump in economic data means a slump in demand for crude oil.