Oil Price Fundamental Daily Forecast – OPEC+ Expected to Announce Historic Production Cut
U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching higher early Thursday as traders await the announcement of production cuts from the world’s largest oil producers later in the day.
The early price action indicates traders are going into today’s session with high expectations that a deal will be reached with the markets seemingly poised to breakout to the upside.
At 08:21 GMT, May WTI crude oil is trading $26.35, up $1.26 or +5.02%. June Brent crude oil is at $33.99, up $1.15 or +3.50%.
OPEC+ Set to Convene a Video Conference
OPEC and its allies including Russia, a group known as OPEC+, are set to convene a video conference meeting on Thursday.
The meeting is expected to be more successful than their gathering in March, where they failed to agree to extend supply cuts and triggered a price war between Saudi Arabia and Russia, according to CNBC.
Hopes of an agreement to cut between 10 million and 15 million barrels per day (bpd) rose after media reports suggested Russia was ready to reduce its output by 1.6 million bpd and Algeria’s energy minister said he expected a “fruitful” meeting.
Such a sizable reduction would be far bigger than any production cut OPEC has every agreed on before, CNBC said.
Saudi, Russia Still at Odds Over Plans for Oil Cuts Hours Before Talks: Sources
Reuters is reporting that Saudi Arabia and Russia still need to resolve differences over plans for deep global oil production cuts, a Russian source and an OPEC source said on Thursday, hours before the start of talks between OPEC, Russia and others over efforts to prop up prices.
“I’m not sure how Russia and Saudi Arabia would be able to iron out their differences today, it all could be stretched out,” the Russian source told Reuters.
Two Russian sources said the maximum Russian oil production cut under any global pact on supplies would be 2 million barrels per day (bpd).
Daily Forecast
We’re expecting a deal like most traders. This should be short-term bullish with the size of the initial rally likely to be determined by whether the agreed upon production cut is 10 or 15 million barrels per day.
However, we also expect gains to be capped because the fundamentals are bearish. There is too much supply and demand has been crushed by the spread of the coronavirus.
Some analysts are skeptical about how effective an OPEC+ cut would be in shoring up prices.
“Ultimately, the size of the demand shock is simply too large for a coordinated supply cut,” Goldman Sachs said in a note.
This article was originally posted on FX Empire
More From FXEMPIRE:
GBP/USD Daily Forecast – U.S. Initial Jobless Claims Are In Spotlight Again
USD/JPY Forex Technical Analysis – Bearish Traders Defending 109.318 Creating Key Resistance
EUR/USD Daily Forecast – Markets Await Powell’s Speech and Jobless Numbers
AUD/USD Price Forecast – The Australian Dollar Breaks To Extreme Highs
