Oily update ahead of producers’ meeting

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

brent oil.png

WTI – Double Top on daily chart

WTI oil

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