Breaking: Crude Oil Prices Spike on Saudi and OPEC Surprise

2021-03-04 16:18:00

Oil Prices up 5% on Saudi and OPEC Surprise
Saudi Arabia and OPEC Agree to Refrain From Boosting Output
$70 for Brent Crude Ahead?

Oil Prices Spike on Saudi and OPEC Surprise

Oil prices are soaring on the back of Saudi Arabia and OPEC’s decision to roll over existing cuts throughout April. Like many and including myself, this was the lowest likely outcome with the consensus set for a 500kbpd increase in production. However, that is what has turned out and as a result, WTI and Brent crude futures are up a lofty 5% with the latter at the highest level since January 2020. In light of this outcome, there seems to be little in the way that prevent Brent crude futures hitting $70 in the very short term.

It is important to note that the reports are still emerging with an official statement yet to be finalised

*Update*

Details: Now that the dust has settled, the details are that Saudi Arabia will rollover its voluntary 1mbpd production throughout April before gradually bringing back supply in May. Meanwhile, OPEC+ members will also refrain from hiking production with exemptions given to Russia and Kazakhstan, who will be allowed to boost output by 130kbpd and 20kbpd respectively.

Monitoring OPEC Developments

For monitoring OPEC keep tabs on #OOTT on Twitter and particularly tweets from OPEC watcher, Amena Bakr.

Oil - US Crude Mixed

Data provided by

Change in	Longs	Shorts	OI
Daily	4%	-6%	0%
Weekly	-14%	14%	-7%

What does it mean for price action?

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Market Reaction: In response to the headlines that both Saudi Arabia and OPEC+ were considering rolling over production, oil prices rose sharply in the following hour, breaking above $67/bbl. Alongside this, the boost in oil prices saw commodity linked currencies (CAD, NOK, RUB) push higher. Looking ahead, given the surprise announcement, oil prices remain firmly tilted to the upside with the doors now open for a test of $70/bbl. Similarly, USD/CAD has broken short-term support at 1.2580-85, raising the likelihood of a move to 1.25.

Crude Oil Chart: Intra-day Timeframe