“We continue to see a $47-$55 range for WTI heading into the November 30th OPEC meeting believing that falling crude oil and refined products stocks, the potential for a bullish OPEC announcement and managed money’s eagerness to buy dips in oil have raised the floor for the market while high levels of existing supplies, tepid demand growth and bottoming LTO production should keep rallies in check,” reports OilPrice.com.
SEE MORE: Energy ETFs Rally as Russia Joins OPEC in Considering Supply Limits
Elevated levels of production remain an issue for oil as well. OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers. Russia has also signaled it might trim output as much as some traders have hoped for.
“US producer data from last week was mixed beginning with a sharp drop in producer/merchant gross shorts from 608k contracts to 560k. The oil rig count, however, jumped to 443 and is higher by 40% since May,” reports OilPrice.com.
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United States Oil Fund (NYSEArca: USO)
