Two days on from Sunday's OPEC+ meeting, new details are emerging that suggest a likely increase in oil supply from the group's member countries.
OPEC+ set a schedule to phase out oil production restrictions. Voluntary production cuts of 2 million barrels per day will be gradually eliminated from October.
“We will maintain our precautious and preemptive approach,” stated Saudi Energy Minister Prince Abdulaziz bin Salman after the meeting. That includes the possibility of pausing or even removing the phase-out of supply cuts, he said.
According to the Saudi Energy Ministry, the restrictions will be in full effect during the third quarter and then gradually phased out over the next 12 months.
Another member of the alliance, the UAE, was given a 300,000 barrel-per-day boost to its production quota for the following year, making it the clear winner from Sunday’s negotiations. The Gulf country has invested heavily in new oil projects over the past few years and it has to take advantage of technical opportunities for oil production growth to get a return on this investment.
Under these circumstances, Sunday's agreement admits that markets have remained well-balanced, but members are now wary of losing market share in the long term, as indicated by the gradual removal of production cuts.
From a technical point of view, after Brent oil correction to the round level of $80 per barrel the downward movement of the prices is expected to continue.
The overall recommendation is to sell Brent oil from the level of $80.0 per barrel.
Profits should be taken at the level of 70.0. A Stop-Loss could be set at the level of 86.0.
The possible loss should not exceed 2% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
