BRENT: Oil Prices Down, but On the Road to Recovery

12 nov.

Oil prices closed Friday with bearish corrections and yesterday's continuation continued, mainly related to the OPEC+ decision to postpone the production increase, as well as the more than possible supply disruptions in the United States. Brents price has discounted -5.83% from $75.89 to %71.42 yesterday at 17:00 Spanish time, confirmed by a highly oversold RSI. Since then indecision has been present in a sideways range that has not pierced $72, and currently RSI is at 35.82% so the room to regain the $74.50 area at the Check Point (POC) is ample. There must be a significant increase in volume to move in the indicated direction.

Key Factors: OPEC+ Decision and Weather Conditions in the U.S.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced that it will postpone its plans to increase production, maintaining the cuts of almost 6 million barrels per day that were established in the last two years. In addition, the threat of Hurricane Rafael in the Gulf of Mexico caused evacuations of energy operations, which also supported prices. U.S. crude oil data will be released tomorrow, Wednesday.


Impact on Latin America
Storm Rafael represents a considerable risk to production in the Gulf of Mexico region, a key region for the energy industry in the United States and producing countries such as Mexico. The evacuation of some oil platforms is already affecting production and, consequently, global crude oil prices. For Mexico, a supply disruption could translate into additional revenue in the short term if prices continue to rise. However, it also means potential increases in the cost of importing oil derivatives, affecting energy-dependent consumers and sectors.

For Latin America, particularly Mexico, Argentina and Chile, stable oil prices can translate into lower energy import costs, which would help reduce inflationary pressures in their economies. In Brazil, one of the region's main oil producers, this context makes it easier to maintain export revenues without a significant escalation of domestic energy prices. In addition, China's expected economic growth, thanks to fiscal stimulus, could increase demand for other commodities in the region, benefiting both Brazil and other exporters of agricultural and mineral products.

Stimulus Expectations in China
Markets are looking forward to China's National People's Congress meeting, where the government is expected to announce stimulus measures to boost the economy. Projections point to an increase in fiscal spending by at least 10 trillion yuan, anticipating higher demand for oil in the world's top oil-importing country.
The market continues to monitor developments in the Middle East conflict, while Donald Trump's election victory has also influenced global financial sentiment, contributing to fluctuations in crude oil prices.

Ion Jauregui - ActivTrades Analyst





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