Source: IG Charts IG Charts
Crude Oil Fundamentals Highlights.
- Crude oil blocked on the upside
- O PEC meetings
- U.S.-China compliance review to set early tone
of clients are net long.
The client is a net short.
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Crude oil blocked on the upside
Brent crude futures are up slightly, by 1% (at the time of writing). However, the upward movement in oil prices has stalled as the outlook is starting to look less optimistic against the backdrop of lingering virus fears. This has been highlighted by OPEC’s recent forecasts, where they have lowered global oil demand by 400 kb/d this year and 500 kb/d in 2021. This also comes at a time when OPEC is looking to continue scaling back production cuts.
Next week’s OPEC+JMMC meeting will take place on August 19 thorium (chemistry) . However, as is typical of OPEC meetings, sources are likely to be updated on plans for the oil market in advance of the meeting. In turn, the headline risk for oil prices in the coming week may be slightly elevated.
As a reminder, in previous meetings, OPEC+ had agreed to trim the record 9.7 mbpd cut to 7.7 mbpd from early August, which was in line with the original plan. Nonetheless, with COVID cases across the US and again in Europe, oil prices remain in tight range, casting doubt on fuel consumption. Although, with some general stability in oil prices, OPEC+ is expected to take a ‘wait and see’ approach, so we don’t expect much change in current policy.
US-China compliance review to set tone ahead
In addition to OPEC, the tone of the oil market early this week may be set on the fallout from the first phase of the U.S.-China agreement compliance review (scheduled for Aug. 15). In recent weeks, President Trump has said that the trade deal means little to him, so the focus may shift to rhetoric around several issues such as cybersecurity (Huawei, Ticktock) and geopolitical concerns (i.e., the Hong Kong Security Act). Nonetheless, news reports from the South China Morning Post indicate that little breakthrough is expected, so risk appetite may be reduced. a struggle to start the week and keep the upward movement of oil prices under control.
Crude oil chart: daily time frame
Source: ig Source.