Oil Price Fundamental Daily Forecast – Steady-to-Higher Ahead of Production Cut AnnouncementBoth WTI and Brent crude oil hit new highs for the week and are in a position to breakout to the upside if there is a big wave of buying volume. Currently, it looks like traders are probing the highs, which is a clear indication they are anticipating bullish news.
U.S. West Texas Intermediate and international-benchmark Brent crude oil are trading higher on Thursday, but the buying looks a little tentative as traders await an announcement from OPEC that could indicate a larger-than-expected production cut.
Reuters is reporting that key members of OPEC+ which includes the 14-member cartel as well as its allies including Russia, recommended that production cuts increase by 500,000 barrels per day. Ahead of the meeting, analysts had widely expected a 400,000 barrel production cut.
Both WTI and Brent crude oil hit new highs for the week and are in a position to breakout to the upside if there is a big wave of buying volume. Currently, it looks like traders are probing the highs, which is a clear indication they are anticipating bullish news.
There was a little controversy at the start of the meeting. OPEC kingpin Saudi Arabia has denied pursuing a deeper round of production cuts, one senior official told CNBC on Thursday, despite intense speculation the global oil-producing group was on the cusp of imposing further output curbs.
The oil-rich kingdom was widely considered to be pushing for other OPEC members to sign up for at least an additional 400,000 barrels per day (bpd) of production cuts. But, one anonymous Saudi oil official told CNBC on the sidelines of a meeting in Vienna, Austria that this was not the case – and Riyadh had not proposed any figures.
The 14-member group will hold talks on Thursday, before meeting with non-OPEC allies, including Russia, on Friday.
The early price action suggests traders may have already priced in a 400,000 barrel production cut, so further gains are likely to be limited. Prices could surge into their September highs if OPEC+ decides on a 500,000 barrel cut in output. However, the amount isn’t as important as compliance with the production cuts.