Oil Price Fundamental Daily Forecast – Direction Determined by Outcome of Oil Ministers’ Meeting

James Hyerczyk
Updated

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading slightly better early Monday, but inside Friday’s range, suggesting investor indecision and impending volatility.

There has been no follow-through to the downside following Friday’s steep sell-off amid growing expectations that the joint OPEC and non-OPEC oil ministers’ meeting later in the day in St. Petersburg, Russia would address rising production from Libya and Nigeria, two OPEC members exempted from their production cut agreement.

WTI Crude Oil
Daily September West Texas Intermediate Crude Oil

The six OPEC and non-OPEC ministers in attendance are expected to discuss the market outlook and compliance with output cuts. Their primary job is to instill confidence with the majority of OPEC and non-OPEC members who signed an agreement to trim about 1.8 million in daily production. At the time the agreement was reached, the participants expected production to drop, the global supply glut to decrease and prices to stabilize.

The direction of the crude oil market today will be determined by trader reaction to any news that comes out of the meeting. Positive news will drive prices higher. Negative news will be bearish for crude oil.

On Saturday, Kuwait’s oil minister, Essam al-Marzouq, offered a positive assessment of the situation when he said that compliance was good with oil production cuts by OPEC and non-OPEC countries and that deeper cuts were possible.

Brent Crude
Daily October Brent Crude

Besides deeper cuts in production, officials may recommend a conditional cap on Nigerian and Libyan oil production.

In other news, OPEC Secretary General Mohammad Barkindo said a rebalancing of the oil market is progressing more slowly than expected, but it will speed up in the second half of the year.

Additionally, Russian Energy Minister Alexander Novak said Libya and Nigeria should cap output when their output stabilizes, according to the Financial Times.

Trader reaction to the short-term retracement zone at $45.79 to $45.32 will determine the direction of the market today. A sustained move over $45.79 will signal the presence of buyers. A sustained move under $45.32 will indicate the presence of sellers with $43.83 the next downside objective.

This article was originally posted on FX Empire

More From FXEMPIRE: