News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The Australian Dollar remains vulnerable to most of its major counterparts, with AUD/USD and AUD/JPY resuming losses. Did AUD/NZD bottom? AUD/CAD may consolidate. Get your weekly Australian Dollar forecast from @ddubrovskyFX here: https://t.co/sjh91mjtXs https://t.co/dGT067zKnH
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/VLZQhrQTAf
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Learn about the importance of the ISM manufacturing index here: https://t.co/Xr3xtoFpZy https://t.co/j5xDAG6LLb
  • While the meetings of central bankers in the US, Japan and the UK will be front, left and center of traders’ minds this coming week, it would be wise not to ignore next Sunday’s German Federal Election. Get your euro forecast from @MartinSEssex here: https://t.co/m920Uvmngm https://t.co/yQYtfHf66s
  • Take a closer look visually at the most influential global importers and exporters here: https://t.co/G58J1dg6y3 https://t.co/Dqq9S9vGvo
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/lccPTTlvj0
  • GBP/USD’s consolidation could end soon if price breaks out of a symmetrical triangle in play since July. At this time, a downside breakout is likely following the appearance of a death cross. Get your weekly $GBP forecast from @DColmanFX here: https://t.co/WIKdSesfkJ https://t.co/Fx0qr32xgI
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/IRS9MaA7h8
  • The Federal Reserve rate decision is likely to sway the near-term outlook for the price of gold as the central bank appears to be on track to scale back monetary support. Get your weekly gold forecast from @DavidJSong here: https://www.dailyfx.com/forex/fundamental/forecast/weekly/CHF/2021/09/18/Gold-Price-Outlook-Hinges-on-Fed-Rate-Decision-Forward-Guidance.html https://t.co/dWWxtErjK0
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/4qxwiJsV1K
OPEC Preview: Oil Producers to Announce a Fresh Round of Curbs

OPEC Preview: Oil Producers to Announce a Fresh Round of Curbs

Justin McQueen, Strategist

Oil Price Analysis and News

  • Cataclysmic Drop in Oil Prices Sparks Need for Action
  • Baseline Case: OPEC and Non-OPEC to Agree Cut
  • Link to tentative program, click here

For a more in-depth analysis on Oil Prices, check out the Q4 Forecast for Oil

OPEC and Non-OPEC ministers will convene on December 6th for the 175th OPEC and 5th non-OPEC ministerial meeting. Heading into the meeting, the consensus is for OPEC and Non-OPEC members to agree a production cut to stabilize prices.

Cataclysmic Drop in Oil Prices

Ahead of the implementation of sanctions on Iran’s oil sector, crude oil prices had been trading at near 4yr highs from the beginning of October with Brent above $85 as markets feared possible supply shocks. This in turn sparked the likes of Saudi Arabia and Russia to boost supply in order to keep the oil market well supplied. However, what had taken many by surprise had been the cataclysmic drop in oil prices from October, which saw the worst run of losses since the financial crisis with Brent plunging 30%. A multitude of factors had been behind the drop, most notably, the surprise announcement by the Trump administration to issue oil waivers for 8 nations, including Iran’s largest buyers (China & India), subsequently reducing the impact of sanctions.

Alongside this, the general message from the IEA, EIA, and OPEC oil reports had been that oil supply is set to rise given sizeable increases in output from the US (Currently producing at record levels), while the global growth outlook is expected to slow amid the backdrop of trade wars. Consequently, providing a more bearish outlook for oil prices, which had been reflected in the Brent and WTI curve, flipping into contango.

Baseline Case: OPEC and Non-OPEC to Agree Cut

The general consensus is that OPEC and Non-OPEC will agree to cut output from anywhere between 1-1.5mbpd, particularly as oil heavyweights Saudi Arabia and Russia have both stated that they see a need to act to prevent a supply glut. The question is, by how much?

OPEC source reports noted that oil producers had been working towards a minimum output cut of 1.3mbpd from October levels (33.27mbpd). However, it added that Russia’s stance on how much they would contribute to the cuts had been the main obstacle (prefer to cut by 150kbpd vs 250-300kbpd).

Potential Scenarios

No Cut: Failure for OPEC and Non-OPEC members to reach an agreement could see oil prices fall sharply with Brent potentially breaking below the YTD lows to hover around the region of $55.

1mbpd Cut: This would be the bare to minimum to help ease the recent sell-off in oil prices, while this would also be the reversal of the 1mbpd boost in oil production by Russia and Saudi Arabia back in September.

1.3-1.5mbpd Cut: Forecasts have suggested that anything less than a cut of 1.3-1.5mbpd would likely lead to an increase in global oil inventories in H1 2019. This would undoubtedly have the most bullish impact on prices, however, a sizeable cut would need the involvement of Russia and is likely to be highly criticized by President Trump.

Recent Commentary from Oil Ministers

Country

Comment

Saudi Arabia

Too soon to say if OPEC and allies would cut production as the terms of the deal remain unresolved (Dec 4th)

Russia

There will be a decision on whether to cut oil output (Nov 30th)

Iraq

OPEC meeting will aim to achieve balance in oil markets and bolster prices (Dec 4th)

UAE

There is a requirement for an adjustment in oil production, adds that it is important for everyone to get on board (Dec 4th)

Iran

Will not discuss OPEC quota with anyone as long as it is under sanctions (Dec 5th)

Kuwait

Will discuss market conditions and how to stabilize oil markets (Dec 4th)

Nigeria

There is absolute resolve to stabilize oil market and whatever actions taken will be taken (Nov 28th)

Angola

No recent commentary

Venezuela

Hoping to raise output next year but will respect any new deal if OPEC agrees to reduce output from December (Nov 11th)

Libya

No recent commentary

Algeria

No recent commentary

Ecuador

Would support an OPEC production cut (Nov 26th)

What Traders Need to Know When Trading the Oil Market

Important Difference Between WTI and Brent

Oil Impact on FX

Net Oil Importers: These countries tend to be worse off when the price of oil rises. This includes, KRW, ZAR, INR, TRY, EUR, CNY, IDR

Net Oil Exporters: These counties tend to benefit when the price of oil rises. This includes RUB, CAD, MXN, NOK.

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES