Speculation about a major production increase in November weighs on prices – Commerzbank

FXStreet Insights Team FXStreet

Brent crude is drifting toward the lower end of its two-month trading range as traders weigh the possibility of a larger-than-expected OPEC+ production increase in November. Despite official denials, past surprises from the group are keeping markets cautious, Commerzbank's commodity analyst Barbara Lambrecht notes.

Brent under pressure ahead of OPEC+

"Oil prices are under pressure, with Brent crude approaching the lower end of its roughly two-month trading range. Prices are being weighed down by speculation that the eight OPEC+ countries meeting virtually on Sunday may announce a significantly larger production increase for November than for October."

"While daily production this month is set to rise by "only" 137,000 barrels, reports from news agencies, citing delegates, suggest that production increases of up to 500,000 barrels per day could be on the table for November."

"Despite OPEC's denial and its statement that discussions on this matter have not yet started, market participants appear to be positioning themselves cautiously. After all, the group has frequently surprised markets with swift production hikes in the recent past."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.