WTI’s performance improved this week, however, the oil price is clearly lacking the directional drive expected after the OPEC deal
Key factors at play in crude oil market –
- OPEC members agreed last week to cut down production by 1.2 million barrels per day. The deal would come into effect from January next year.
- 10 Non-OPEC countries participated in a conference last Saturday in Vienna and concluded an oil deal, which would see their production being cut by 558,000 barrels per day.
- Russia will cut production by 300,000 barrels to 10.924 million barrels per day over the first half of next year, among which 200,000 barrels would be cut in the first quarter.
- Despite OPEC deal, EIA forecasts that oil price to remain around $50 per barrel next year as the supply from non-OPEC countries, who are not part of the deal likely to rise.
- Global oil inventory now stands at 3.1 billion barrels.
- US production has been rising after bottoming in August to 8.4 million barrels. The current US production stands at 8.8 million barrels per day.
- API inventory report showed that crude inventory last week declined by 4.15 million barrels per day.
Today’s inventory report from US Energy Information Administration (EIA) will be released at 15:30 GMT. Trade idea –
- With a deal done, we expect the WTI to reach $54 per barrel and then extend the gains towards $59 per barrel.
