On Thursday, November 30, OPEC and non-cartel oil producers will meet at a meeting in Vienna. During the meeting, it is likely that the decision to extend the oil production limit until the end of 2018 will be made. The current agreement is in force until the end of March 2018 and provides a cut of 1.8 million barrels per day of production. The aim of the restrictions is to reduce the global oil surplus to a 5-year average, but after the year of the pact, the participants of the agreement are halfway there. According to OPEC data, in the period January-September 2017, inventories were reduced by 178 million barrels, but 159 million barrels remained to meet the target. This is why, as reported by Reuters, Saudi Arabia strongly lobbied for appropriate declarations to extend the agreement by the end of 2018 as soon as possible. Still, the decision is not entirely certain. Although Saudi Arabia may affect smaller members of the OPEC cartel, but Russia's stance, the largest non-OPEC oil producer, is uncertain. There is conflicting information from Moscow, including an extension of 6 months.
The market already has high expectations for the deal, which limits the oil growth potential. The fact that crude oil has been limited to responding to leaks and gossips makes the 9-month extension a reality, as the markets have almost completely discounted this scenario. If OPEC fails, the price may be significant.
Let's now take a look at the Crude Oil technical picture at the H4 time frame. The market has broken out from the golden channel again and now is trading above the 127%Fbo extension level. The next target is 161%Fibo extension at the level of 59.71. The next important technical resistance is seen at the weekly time frame chart at the level of 62.67. Please notice the extremely overbought market conditions which might indicate a pull-back towards the level of 58.20.
