Oil has bounced of lows this morning after OPEC look set to introduce a 1mln bpd cut
Oil markets have pulled back up after a battering in recent times following reports this weekend that Saudi Arabia & OPEC may cut its supply for December. This morning oil prices increased 1% which is the highest in around one month following the news. It is believed that OPEC members came together to discuss a 1mln bpd cut.
All of this has come after the US has been posting higher and higher production numbers in its weekly DoE and API inventory levels. It is said that production in the US has reached over 11mln barrels per day (BPD) which takes the nation to number 1 in the world for production. There are a few reasons for the increased supply from the States, one being the end of the summer. American's travel heavily during the summer months mostly within their own country, this obviously increases the demand for fuel and was reflected in the data from the Department of Energy. The second reason is a prudently fought political battle by Donald Trump. The US president has made it obvious in recent months (mostly on twitter) that he has not been happy with higher oil prices. He then threatened Iran with sanctions and the markets pushed oil higher as they thought the hot-headed president would be tough on the nation. He then pulled back and placed exemptions on exports to the likes of China and India who import lots on oil from Iran which then led to the fall of WTI and Brent. Trump commented saying he didn't want to impose hard sanctions as he didn't want to be the reason for higher oil prices.
Today spot WTI trades at $60.92/bbl a far cry from the highs seen in October of $76.88/bbl when analysts were calling for $100/bbl. Technically we have not hit the trendline originating close to the beginning of 2016 and connecting to the wave low in May 2017. If prices keep dipping it could be a good area of support. For now, the psychological $60/bbl seems to be holding....