Will OPEC Make Or Break Crude Recovery Rally?

OPEC in FocusCrude oil futures are hovering around the $78 mark today ahead of the OPEC+ meetings taking place later. The market has seen better trading over the last few days, taking advantage of a weaker US Dollar to recover some ground to the topside. Expectations of an extension (and possibly a deepening) of production cuts are helping keep crude supported ahead of today’s talks. OPEC+ recently extended its current cuts through year end, a move which helped offer markets some relief. Traders are now looking to see these cuts extended deep into next year.Internal DisputesHowever, going into the meeting today there is a great deal of uncertainty given the tensions and divisions we’ve seen within OPEC in recent weeks and months. Cartel members have apparently clashed over Saudi Arabia’s insistence on extending cuts further with some nation-producers looking to increase their output.Macro Challenges for OPECWhile a weaker US Dollar is a positive factor, OPEC is facing a difficult global backdrop. Developments in the Middle East are having a significant impact on oil prices. Fears over the health of the Chinese economy are also a key factor here, highlighted by a further negative manufacturing PMI reading overnight. Demand in the US has also come under scrutiny as highlighted by a recent string of EIA inventory surpluses. Consequently, unless OPEC is able to surprise markets today either with a longer duration of cuts, say through to the end of 2024, or with a deepening of current production cuts, it might not be enough to keep prices supported near-term.Technical ViewsCrudeThe sell off in crude has stalled for now along support at the 72.61 level. The market looks to be carving out a potential inverse head and shoulders pattern, suggesting risks of a forthcoming bullish breakout above the bear channel. Above 77.64, 82.59 will be the key hurdle for bulls.