Summary:
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Oil dips below $55 to make new 15-month low
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Markets continues lower despite recent OPEC+ cuts
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Saudi Arabia states it will cut more than agreed upon in latest OPEC+ pact
There’s been some further selling seen in the energy markets today with the deep plunge which has consumed price in recent month showing little sign of letting up. Price has dropped below the weekly lows and moved beneath the $55 handle to trade at its lowest level since September of last year. The market has made another leg lower after a few weeks of consolidation and until there’s a daily reversal signal then there’s little by the way of reason to enter into longs, as the practice is akin to trying to catch a falling knife.
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Oil has made new lows today as more selling has hit the market and you have to go back to September 2017 to find lower prices. Source: xStation
There’s little by the way of any negative news to support the latest leg lower, with it seemingly more just a continuation of the downtrend in place - In the same way that during a bull market there doesn’t need to be positive news to account for every rally. If anything the news on the whole has been positive for crude prices of late and today we’ve had more attempted jawboning from Saudi Arabia. The kingdom has plans to curb its oil output by more than the amount committed to in the recent OPEC pact, according to documents seen by the Wall Street Journal.
The price of Oil is down by approximately 10% since OPEC announced the agreement with Russia the cut production by a combined 1.2 million barrels a day, perhaps due to some concerns that members will apply their promised reductions. “In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” OPEC secretary-general Mohammed Barkindo wrote in a letter reviewed by the Journal. “This is also vital to underpin trust in our decisions and to buttress ourselves from any naysayers who may doubt our commitment.”
Recent reports are calling for a more transparent method of compliance to the output cuts promised above in the aim of increasing transparency and dispelling talk that they aren’t being implemented fully. Source: OPEC
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