The North American oil benchmark, WTI is faced with heavy selling pressure as doubts emerge over the possibility of an OPEC deal in November.
Key factors at play in crude oil market –
- OPEC members have agreed to a production freeze deal that would keep the OPEC production within the range of 32.5 -33 million barrels per day. OPEC currently produces 33.25 million barrels.
- The details of the deal would be finalized at the November meeting.
- Disputes between the OPEC secretariat and Iran, Iraq, and Venezuela have surfaced with regard to the production levels. These three countries accused the secretariat of under-reporting of their production levels.
- OPEC came out with a statement that such disputes won’t be a hindrance to any deal.
- Iraq has called for an exemption from the deal as they don’t want to cut production. OPEC members need to take cuts in order to abide by the deal.
- Global oil inventory now stands at 3.1 billion barrels.
- Active oil rigs in the US have been climbing and up more than 35 percent from its bottom.
- API report showed 4.8 million barrel increase in weekly crude oil stock.
Today’s inventory report from US Energy Information Administration (EIA) will be released at 14:30 GMT. Trade idea –
- Our call to buy WTI at $48 per barrel, targeting $53.5 per barrels stands. We have now extended targets to $68 per barrel. Stop loss is at $42-40 area. We expect the OPEC and Russia (despite our doubts on the deal) not to abandon the deal at this point.
