Crude oil price forecast ahead of the OPEC+ meeting

Crude oil price has extended Friday’s losses as the market digests the weak Chinese economic data. As at the time of writing, Brent futures was at $102.52; down by 1.06%. At the same time, WTI oil was down by 1.57% at 96.73. In the just concluded month of July, the commodity recorded the second consecutive month of losses. Notably, that was the first time that happened sine the second half of 2020.   

Fundamentals

Data released on Sunday showed that the Chinese factory activity unexpectedly shrunk in July; an aspect that added to concerns that slowed global economic growth will yield crude oil demand destruction.

In recent months, the commodity has been subject to heightened volatility as the forces of tight supplies and fears over the decline in demand impact the market in equal measure. In the past week, the US GDP data indicated that the economy contracted for the second quarter in a row; meeting the standard definition of a recession.

Later in the week, investors will be keen on the OPEC+ meeting. In mid-July, President Biden failed to secure a deal for Saudi Arabia to increase oil production.  

Crude oil price forecast

Brent oil has edged lower in Monday’s session; recording losses for the second session in a row. As shown on a daily chart, it is still trading below the 25 and 50-day exponential moving averages.

Even with the decline, I expect the psychologically crucial level of 100 to remain a steady support zone. From this perspective, crude oil price may find support at 101.51 in the short term with the 25-day EMA at 106.44 being the resistance level to watch out for. However, if the bulls manage to yield a bounceback past that level, they may have an opportunity to retest last week’s high of 108.99.

As aforementioned, 100 will likely remain a steady support zone. As such, a move below 99.13 will invalidate this thesis.