What are your key takeaways from the OPEC Plus assembly? They have clearly determined to defend oil restoration by way of costs slightly than provide available in the market proper now?
It is motivated by way more than a want to put a flooring beneath costs and I see Saudi Arabia and inside that the Crown Prince MBS and his technique written throughout yesterday’s resolution. I’d take you again to the place this risk begins, which was in January with Saudi saying a 1 million barrel per day unilateral lower.
What I believe is going on is that the dominion is writing a model new chapter on this OPEC, non-OPEC alliance story. It is a really shrewd transfer, they’ve successfully marginalised Russia with this unilateral lower. They knew very properly that Russia’s continued presence inside OPEC, non-OPEC would imply they might have to compromise on their hawkish stance.
Does it additionally imply elevated crude prices for some time to come?
Well they’ve undoubtedly given crude bulls one other shot within the arm. It is OPEC plus on paper however it’s a transfer by Saudi Arabia. Yesterday’s kneejerk response as crude costs spiked 4%. It was beneath intra session excessive. Intra session highs have been properly above $67 for Brent, The resolution was surprising and was nearly a 180 diploma from what the market had been bracing for which is anyplace between 1 to 1.5 million barrel per day improve in output!
As the market takes a couple of steps again and assimilates all of the shifting components relating to demand and provide, there can be a pullback in costs. I don’t anticipate a continued crimson sizzling rally from right here. There will certainly be a pause till the following main bullish or bearish issue comes into view.