Brent rose 1.1% on Friday but overall fell about 1.0% on the week, which appears largely to be profit-taking, in the opinion of strategists at OCBC Bank. The market’s attention will firmly be on this Wednesday’s OPEC+ meeting, in which members are likely to discuss downgrading the monthly full-scale ministerial meeting to just the joint ministerial monitoring committee (JMMC).
Energy slid marginally last week
“We view last week’s 1% decline in Brent as profit-taking, especially after how the same benchmark rose 6% in the prior week. The time-spread on Brent has stayed largely stable as have crack spreads on both gasoline and diesel.”
“This week’s OPEC+ meeting is unlikely to focus much on production, but instead the objective will be to downgrade the monthly meeting from full-ministerial to just the joint ministerial monitoring committee, which in itself suggests there will be no big changes in output policy from the bloc in the short-term.”
“The biggest risk to our upside call now looks like that of the virus outbreak in India, a big importer and consumer of oil. PM Modi has so far pushed back against a nationwide lockdown but time is probably running out. A full lockdown from such a vital oil consumer could likely knock back Brent into the $60-$65 trading range.”
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