Trading volatility: Brent around OPEC meeting
The postponement of the weekend’s OPEC+ ministerial meeting to Thursday 30th has seen traders short Brent, the OPEC benchmark.
IGTV’s Jeremy Naylor looks at the potential risk to the downside in what appears to be a disagreement amongst OPEC+ members on the need for further supply cuts.
(AI Video Transcript)
The OPEC meeting
The Organization of the Petroleum Exporting Countries (OPEC) meeting, which was supposed to happen this weekend, has been delayed until next Thursday, which is causing people to wonder about the disagreements and tensions within the organization. The main issue seems to be that they can't agree on how much they need to cut oil production in order to keep prices stable. Because of this, oil prices have been under pressure, with Brent, which is kind of like the standard for OPEC pricing, trading below the 200-day moving average and forming lower highs and lows.
There's a specific level that people are watching out for, which is the lowest point that oil prices reached on November 16th. If the market goes down as expected, it could be a good chance to sell. On the other hand, if OPEC agrees on significant cuts in supply, it could help boost the market. Right now, the amount of oil being produced has already gone down by 5% in the last year because of the cuts that OPEC+ made. So, if things just stay the same, it would be a good time to sell, with the stock going above the 200-day moving average.
Brent oil prices
However, if OPEC ends up making a weakened deal, it could make oil prices even more unstable. Some countries that rely on selling oil really need the money, so they're selling more oil than they're technically allowed to under the supply cut agreements. This postponed meeting, which is now set for November 30th, is really important and could potentially cause Brent prices to go down. So, it's a bit of a wait and see situation right now.
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