Oil is off to a strong start to the week. It gapped 80-cents higher at the Asian open and has continued higher. It's up $1.91 to $71.40, which is the highest since October 25.
The main driver is the OPEC+ decision to extend voluntary production curbs for an additional month. Some oil was scheduled to come back online in December but that has been delayed by a month, and potentially longer.
I'm somewhat surprised at the strength of the move, given there was a report last week suggesting the delay could happen. It's also a sign that demand has undershot OPEC expectations and highlights the risk of oversupply going forward.
Perhaps adding to the upside has been the ongoing talk of Iranian retaliation and anxiety about war. A Haaretz report today says that Iran is ready to respond but the timing is unclear. Mixed into that could be suspicions that any contested US election could create a power vacuum that sparks some kind of war.
Overall, oil remains in the lower part of the 2024 range and November is a seasonally soft month. The good news for bulls is that $65-67 is looking like solid support and the seasonals are much improved starting in December.
