Brent and WTI crude oil are losing in the range of 1.5% today after traders priced in still-high U.S. crude inventories and a potential OPEC+ decision not to make additional production cuts.
- Fund manager Andurand Capital pointed to the prevailing short positioning of hedge funds ahead of the OPEC+ meeting.
- The fund no longer expects oil to reach $100 per barrel, and is pricing in the risk of increased production by the Saudis if the other OPEC+ countries do not consider cuts
- At the same time, Andurand points out that it is likely that the Saudi Arabia may want the other OPEC+ members to opt for more cuts
- Russian Prime Minister Novak indicated that the oil market is currently balanced, and crude prices are relatively favorable, which puts a big question mark over whether Russia will decide to cut. However, Novak declined to comment on Russia's decision at the OPEC+ meeting
- The meeting is scheduled on this weekend, but OPEC+ delegates signalled that talks scheduled for the weekend may be delayed as Saudi Arabia is not satisfied by OPEC+ members production levels
- Israel's deal with Hamas was also welcomed by bears on oil because it may signal that risk of conflict spread in the Middle East is now lower. Hamas will free about 50 Israeli hostages in exchange for a four-day pause in fighting in the Gaza, and also some Palestinians will be released from prisons.
A potential correction on OIL would indicate a possible near-term downward move to the area of $78 per barrel. Oil prices may be volatile during today US EIA report reading (3:30 PM GMT).
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Source: xStation5
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