AlexTrik
Short

Oil hates uncertainty

TVC:USOIL   WTI Rohöl CFD's
1 month ago today, OPEC unofficially decided that they would cut production by 32.5-33m br/day. That announcement sent oil into gains frenzy skyrocketing it to almost $52/barrel. That unofficial statement was not enough to make oil break the resistance and reach the expected price of $60/barrel. Now during the OPEC and non-OPEC members meeting in Vienna in Friday and Saturday things took a very different turn than hoped. Starting with the OPEC meeting on Friday, the members failed to come to a conclusion and cut production with the biggest opposer being Iraq. Saturday, leaks hint towards a non-conclusive meeting as well. This leads me to expect further movement south for oil over the next weekend. TP for me is $47. Still, I think no production cut could mean that oil tumbles more and thus I will be trading oil over the next month until their next meeting ONLY if it manages to break below the $47-46.8 area with relatively high volume and if indicators favour a short play.
Trade ist aktiv: Saturday meeting led to nowhere. Oil will go down over the next week with a 90% certainty.
Trade ist aktiv: Oil is moving unexpectedly rapid towards that $47 support. If after all the week's data we manage to break that, next inevitable support is $43.
Members can agree to production cut for higher oil prices.
It is to their advantage, but whose to monitor if any cheating takes place.
Assume no agreement, no collusion to limit oil production output;
Then WTI oil price declines, but by how much?
In a free market, your $46.80 should likely be the floor;
This time of year there is not much demand and oil stockpiles;
Expectations of WTI below $45 is where oil prices were 9/28 on the handshake agreement.
This coming Monday's oil trade higher/lower will be of interest.
Antworten
AlexTrik JoeTong
Your former statement is not 100% true. It depends on the objectives of each producer. For countries like Venezuela where profit maximization is the target, then yeah highly prices automatically mean better off. Countries like SA, who's current main objective is elimination of competition, lower prices are better for them as they got a lower cost of production and thus and advantage in the global oil market. Furthermore, members are not the only major producers of oi, thus cooperation from countries like Russia is also needed for effective application of a production cap.
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