First of all, let us note the producers’ meeting over the weekend is unlikely to change excess supply situation and here is why –
- Markets would still remain oversupplied by about 2 million barrels per day
- OPEC and IEA have both revised global oil demand growth forecasts lower
- Joint OPEC and non-OPEC production cut is unlikely to happen any time soon
- Furthermore, oil prices have already priced-in output freeze.
Hence, if we have output freeze agreement over the weekend, oil would see a gap up opening and the strength could last till Europe or early US, before “sell the fact” trade takes over – prices begin to fall.
Let us take note of the technical patterns in oil benchmarks.
Brent – Rising Channel on daily chart
WTI – Double Top on daily chart