OIL: OPEC Revises Down Demand Outlook, Strong USD Weighs

Oil prices are little changed after falling sharply on Monday with the strengthening US dollar weighing. The USD BBDXY index is now up 2.1% since November 5 increasing another 0.5% on Tuesday driven by higher yields. The market is focussed on supply/demand fundamentals and remains concerned about an expected surplus in 2025. 

• WTI has broken below $68 and is 0.1% lower at $67.97/bbl after a high of $69.09. It is now down 1.8% this month. The bearish theme persists and the soft start to this week has reinforced it. Initial support is at $66.72 with the bear trigger at $64.16. Initial resistance is at $72.88.
• Brent is down 0.1% to $71.75/bbl after rising to $72.77 and then falling to $71.64. The benchmark is 1.4% lower in November. Initial resistance is at $76.24, November 5 high, while support is $70.28, October 29 low.
• OPEC released its monthly report which showed a downward revision to its 2024 demand forecast for the fourth straight month, a cumulative 18% reduction. 2024 demand will grow by 1.8mbd, almost 2%, down 107kbd from October due to China, India and Africa. 2025 is forecast to rise 1.5mbd, revised 103kbd lower.
• The market is worried that delayed OPEC plans to increase output will still be implemented at a time of weaker demand, especially from China. Its strategy will be revisited at the OPEC meeting on December 1. There could also be higher US production under the Trump administration. The possibility of deteriorating geopolitical tensions in the Middle East is always present with Iran threatening Israel with another attack.