Turning point? Citigroup: If oil prices fall below $70, OPEC+ may consider resuming production cuts
Citigroup warns that hurricanes in the United States pose a significant threat to the oil supply chain, and the ongoing tension in North Africa and the Middle East could easily trigger oil price fluctuations. If Brent crude oil continues to fall, especially when approaching the support level of $75 per barrel, it may stimulate a rebound in oil prices
Oil prices have been weak recently, prompting some investors to see short-term buying opportunities. Citigroup believes that although recent geopolitical tensions have eased, the trend of supply chain tightness may drive oil prices higher.
In a research report released earlier this week, Citigroup pointed out that the recent decline in oil prices is mainly influenced by two key factors: geopolitical risk easing and uncertain global demand outlook.
Nevertheless, the institution warned that despite the seeming calm in geopolitics, risks still exist. Hurricanes in the United States pose a significant threat to the oil supply chain, and the ongoing tensions in North Africa and the Middle East can easily trigger oil price fluctuations.
The U.S. Energy Information Administration (EIA) reported this week that commercial crude oil inventories fell significantly, dropping by 4.6 million barrels to 426 million barrels, a decline that exceeded market expectations. Coupled with increased refinery utilization rates and crude oil exports, Citigroup is optimistic about the outlook for crude oil.
Citigroup stated that the current market positioning is historically bearish. If Brent crude oil continues to fall, especially approaching the support level of around $75 per barrel, it may stimulate a rebound in oil prices.
Citigroup emphasized the market impact of technical factors. The 200-day moving average for Brent crude oil is $82.5 per barrel, serving as a strong resistance level, while the $75 per barrel level is a key support level. If prices approach the lower end of this range, it may stimulate a recovery in buying volume.
Looking ahead, Citigroup believes that OPEC+ is facing a crucial decision. With the easing of production cuts in October, if oil prices fall further below $70, it may prompt OPEC+ to reconsider its production strategy.
As of the time of writing, Brent crude oil is fluctuating around $77 per barrel.
