Crude oil price is trading lower following heightened flight cancellations over the Christmas weekend. January’s OPEC+ meeting is also in focus.
January’s OPEC+ meeting
Crude oil price will likely make modest movements in the short term as investor shift their focus to the OPEC+ meeting scheduled for 4th January. In its December meeting, the alliance decided to stick to its existing output hike plan of 400,000 bpd monthly. The move came as a surprise to the investors and analysts who were of the opinion that the group will pause on the policy amid the growing Omicron-related concerns.
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Interestingly, OPEC+ has made an upward adjustment to its forecast of global oil demand in Q1’22 by 1.1 million bpd. The optimism is founded on its view that the Omicron coronavirus variant will have a mild and short-lived impact on oil consumption.
As has been the case in the past, its decision in the coming week will impact crude oil price. A move to increase production by 400,000 bpd in February will likely heighten demand confidence. This comes at a time when flight cancellations have defined the Christmas period.
On Sunday, close to 1,000 flights were canceled following the aggressive spread of the Omicron strain among flight crews. American Airlines, Delta Air Lines, JetBlue Airways, and United Airlines are some of the affected entities. Since Friday, airlines have canceled over 1,500 US flights; a situation that has disrupted travel during the busy festive period.
Crude oil price prediction
Crude oil price has edged lower in Monday’s early session following the high flight cancellations recorded over the weekend. WTI futures closed Thursday’s session at 73.71. No trading occurred on Friday as the US markets were closed for the Christmas holidays.
At the time of writing, the benchmark for US oil was down by 1.28% at 72.76. Nonetheless, it has remained within the crucial horizontal channel of between the psychological level of 75 and along the 25-day EMA at 72.
It will likely remain within that range in the short term as investors await further cues from the OPEC+ meeting early next week. A move below the range’s lower border may place the support zone at the psychologically crucial zone of 70. On the flip side, the bulls will have an opportunity to push crude oil price to 77 if they gather enough momentum to break the resistance at 75.
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