Crude Rises on OPEC Despite Glut, Ukraine Peace Talks

Crude prices vacillate as the White House continues to push its Ukraine peace deal amid apparent resistance from Moscow, and OPEC+ suspends further production increases for the next three months.

The Key Developments

• Crude prices rose at the start of the week after OPEC+ agreed to pause further production increases during the first quarter of this year.
• Ukraine and US delegations met in Florida over the weekend to work on a peace proposal for the war in Ukraine, but further work needs to be done.
• US special envoys are to meet with Putin later this week to potentially finalise a deal that would end the war.

Still Much Work Left on Ukraine Peace Plan

Last week, crude prices were in a downward trend amid hopes that the warring parties in Ukraine would accept the White House's 28-point peace plan. But that , first on Wednesday when it appeared that Russian President Vladimir Putin pushed back against the plan. Then, over the weekend, OPEC+ met and decided to forgo production increases in the first quarter this year amid a growing supply glut. with US counterparts over the weekend. However, both sides recognise the need for additional work, referring to the initial proposal as a 'framework' agreement. The EU has rejected the US proposal to put an end to the Ukraine war, arguing that it offers too many concessions to Russian demands. Russia has not yet responded officially, and US envoys Steve Witkoff and Jared Kushner are scheduled to meet with Putin later this week, a crucial meeting that could make or break the deal.

In the meantime, however, attacks in the war continue, with Russia launching missile and drone strikes across Ukraine over the weekend and . Pending a resolution of the conflict, geopolitical tensions continue to put upward pressure on crude prices. That includes amid growing tensions with the country that has the largest oil reserves in the world. The US has been attacking boats that it claims are carrying drugs amid a significant military buildup off Venezuela's coast. Trump also suggested that operations against drug movements will be conducted on land soon, a potential sign of US military engagement in Venezuela.

OPEC+ Pause Amid Production Glut

The South American nation has been steadily increasing production and surpassed 1 million bbl/day on average in October. It has been part of a global increase in production, including from OPEC+ countries. record-high output in September, but official production data will be in blackout until the November figures become available due to the government shutdown. Amid rising concerns, the market is facing a supply glut as the global economic growth slows and production increases. OPEC+ met over the weekend and decided to .

Brent Nears Breakout Point

Brent prices may be down 15% since the start of the year but rose 1.7% at the beginning of the week following OPEC’s decision over the weekend to suspend production increases. Despite rising, the UK’s oil remains in corrective mode, trading within what appears to be a wedge pattern. However, after leaving behind support at $61 per barrel, correcting at $62, which is at the same level as the decline in early November and suggests a potential inverse head-and-shoulders, and resetting at the 4-hour RSI 50 line, Brent could be due for a breakout. If prices break above the descending trendline near $63–$64, the next resistance levels lie at $65 and $66 swings, with the measured-move projection at $67 from the neckline breakout. On the other hand, dropping back under the $62 support would re-expose $61, opening the door to the $60 support that formed in late October.

Source: SpreadEx | Brent Crude, 4-hour Chart