WTI ebbing lower but within recent ranges ahead of key OPEC+ get-together

• WTI has slipped back to $83.00 in recent trade but remains well within the rough $81.00-$85.00 range of recent weeks.
• OPEC+ are widely expected not to deviate from plans to hike output at a rate of 400K bdp/ month.
• Most analysts remain bullish on oil’s near-term prospects with the global supply/demand imbalance set to persist.

The price of front-month future contracts for the delivery of the American benchmark of sweet light crude oil, West Texas Intermediary (often referred to as WTI), has been ebbing lower in recent trade as traders refrain from placing big bets ahead of this week’s OPEC+ meeting. Ahead of the Thursday gathering, where the group is widely expected not to deviate from its current plan to increase output at a rate of 400K barrels per day each month, most traders are likely to keep their powder dry, meaning WTI may well continue to undulate within recent ranges, as has been the case since the start of the week. At present, front-month futures are trading in the mid-$83.00s per barrel, about $1.50 below Monday’s high at just under $84.00. But that leaves prices well within the $81.00-$85.00ish range of the past few weeks.

In terms of oil-relevant macro updates; there haven't been many notable developments as of late. There has been some chatter about the struggles that some OPEC+ members (mainly in Africa) have been having in lifting output as the cartel’s output curbs have eased in recent months, which has resulted in aggregate over-compliance of the cartel to its own self-imposed output restrictions OPEC+. This adds to the idea that OPEC+ is not increasing output quickly enough to match the rebound in global oil demand, which according to some big US and European oil companies who reported earnings this week has now returned to pre-pandemic levels, has been a key factor underpinning the more than 20% surge in oil prices since the start of September. The return of global oil demand to pre-pandemic levels has happened faster than many analysts anticipated back then because the surge in global natural gas prices has encouraged energy companies to switch to using relatively cheaper derivatives of crude oil as a power source.

Given the above, most analysts remain bullish on WTI’s near-term prospects. If OPEC+ does deliver on expectations and some post-event profit-taking is seen, look out for support in the $81.00 area, where resides a few recent lows and the 21-day moving average. Dip-buyers may see a pullback here may be an attractive opportunity for dip-buyers, which could potentially set the stage for a push back towards annual highs around $85.00 or even beyond.