Oil prices have slumped over 4% since OPEC+ announced that it has reached an agreement on additional oil output cuts at a meeting today. While output cuts should be positive for prices, the announced size of the extra output cut (1 million bpd) was expected by the markets and hinted by media reports. However, details of the agreement turned out to be a massive disappointment. Namely, it seems that OPEC+ did not agree on output levels for individual countries and that member countries will announce size of output cuts themselves. On top of that, it was said that all the extra cuts will be voluntarily. This actually means that OPEC+ has failed to agree on anything definitive. Voluntary cuts can be reversed at any moment, do not require OPEC+ consent to be dropped, and the fact that they are voluntary means that they do not have to amount to 1 million barrels per day. It looks like today's announcement may have been made with a sole purpose of not giving more fuel to speculations on disagreements among OPEC+ member countries.
Taking a look at Brent chart (OIL) at H1 interval, we can see that prices went into freefall following OPEC+ announcement today, erased all of daily gains and are now attempting to break below the 200-hour moving average (purple line).
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Source: xStation5
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