The fate of Oil hangs from a thread

The fate of Oil hangs from a thread

The market holds its breath as the OPEC+ meeting is taking place via video today in Vienna. An agreement regarding the production cuts is expected.

Over the past week, Oil gained more than 4% ahead of the probably most important meeting of OPEC+. Prices had a rough time since the demand fell due to the pandemic and the agreement dissolution between Saudi Arabia and Russia. After their feud, the market got oversaturated. It caused the prices to be at the lowest level since 2002.

Analysts are expecting a collective production cut between 10-15 million barrels per day to compensate for the oversupply, as Saudi Arabia and Russia produce more than 22 million barrels per day. OPEC’s President and Algeria’s Energy Minister said, cited by Reuters, that “the meeting will undoubtedly be fruitful in order to rebalance the market.” For some analysts, the 10 million cuts are just a medium-term goal.

Russia believes that a deal is achievable if other countries, alongside the OPEC+ members, will join the cut. Analysts are expecting a cut from the US side. Still, President Donald Trump didn't show any interest in obliging such a request, and he even suggested that production is already down.

Before the pandemic, for the first time, America became energy independent as it was a net exporter of natural gas, Crude Oil, and petroleum products.

Moreover, according to a draft of the bulletin meant for the member countries, a monitoring group will be created to be sure that all the necessary steps to stabilize the market are taken. The group will report to G-20 energy ministers.


Sources: reuters.com, Bloomberg.com. cnbc.com, forexlive.com

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Users/readers should not rely solely on the information presented herewith and should do their own research/analysis by also reading the actual underlying research. The content herewith is generic and does not take into consideration individual personal circumstances, investment experience or current financial situation.

Therefore, Key Way Investments Ltd shall not accept any responsibility for any losses of traders due to the use and the content of the information presented herein. Past performance is not a reliable indicator of future results.