Brent Soaring As OPEC Forecasts Tighter Markets

Brent Soaring on OPEC DriversOil prices are soaring this week with Brent crude oil trading up to fresh highs on the year, hitting levels not seen since November 2022. Brent is now trading around 32% higher off the YTD lows and looks poised for further gains near term against a highly supportive backdrop. The key driver behind the recent rally has been the extension of production cuts put in place by OPEC+ leaders Saudi Arabia and Russia. The two producers have extended their additional cuts (totally around 1.6% of daily global supply) through year end. This news had a firmly bullish effect on the market given the falling demand outlook we’re seeing globally linked to rising recession concerns.Tight Market Fundamentals Supporting OilMarket fundamentals have come under close scrutiny recently. This week, OPEC issued its latest global forecast which projects a deficit of 3.3 million barrels per day, highlighting the tightness in the market currently. Looking at Q3 data, OPEC reported that output from its producers had fallen short of market needs (by its own calculations) of around 1.8 million barrels per day.  While focus remains on tight supply/demand metrics, oil prices look likely to continue firmly higher.Technical ViewsBrent CrudeThe rally in Brent has seen the market breaking out above the bearish trend line from all-time highs as well as above the 87.26 level. This is a major multi-year resistance area for the market and the break here is an important technical development. While above here, the focus is on a continuation higher with 97.91 the next resistance level to note. Interestingly, we have a bullish signal in the Signal Centre today set at 88.91 showing strong support back into that breakout area.