Brent crude continues to trade higher, hitting $42 after OPEC+ promise to comply with cuts
Oil prices climbed higher on Friday after OPEC+ producers promised to ensure better compliance with agreed supply cuts to offset weaker demand amid the coronavirus pandemic.
Oil prices crept back above the psychological $40 mark on Friday, extending gains made over the course of this week, with the surge spurred by OPEC+ producers promising to ensure better compliance with agreed supply cuts to offset weak demand amid the coronavirus pandemic.
Brent crude is trading 2% higher at $42.38 a barrel at the time of publication, with the US West Texas Intermediate (WTI) up 3% to $40.09 a barrel.
Iraq and Kazakhstan brought in line at OPEC+ meeting
According to a recent report by Reuters, Iraq and Kazakhstan were dragging their heels when it came to complying with the agreed production cuts. But in a recent OPEC+ panel meeting the two countries reportedly promised to ensure better compliance with the production cuts.
‘There is enthusiasm in the market that oil supply is still under control,’ Paola Rodriguez Masiu, analyst at Rystad Energy told Reuters. ‘A positive OPEC+ meeting does that and yesterday’s session helped renew confidence.’
Oil prices have made steady gains this week, helped by the International Energy Agency (IEA) increasing its 2020 oil demand forecast to 91.7 million barrels per day.
WTI on the up again
WTI has been given a significant boost following the Organization of the Petroleum Exporting Countries' (OPEC’s) push to ensure compliance among members on output cuts, according to Chris Beauchamp, chief market analyst at IG.
‘As a result, the price has pushed back towards the highs from 8 June above $40.00, with dip buyers over the past week being rewarded for their patience,’ he added. ‘The bullish view remains in place unless we see a reversal back below $37.50.’
Barclays ups oil price forecast
Despite disappointing global economic forecasts, weak demand and concerns about oversupply, analysts at Barclays raised their 2020 oil price forecast for Brent crude by $4 to $41 a barrel and believe that WTI will trade at an average of $37 this year.
However, analysts at the UK-based bank admitted that prices could fall over the near-term, with the stability of the market highly dependent on consumer behaviours.
Barclays also admitted that renewed fears over a second-wave of coronavirus cases emerging as the world begins to emerge from government-imposed lockdowns will keep prices subdued in the coming months.
‘As we mark to market our [second quarter] estimates and account for a potentially larger [second half] deficit, we raise our 2020 oil price forecasts by $4/b but remain cautious with respect to the curve over the near term,’ Amarpreet Singh, vice president of oil strategy at Barclays, said in a research note on last week.
How to trade commodities with IG
Looking to trade the oil and other commodities? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:
- Create an IG trading account or log in to your existing account
- Enter ‘Oil – Brent Crude’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Trade on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
