Hans van Cleef, Senior Energy Economist at ABN AMRO, suggests that the recent comments from several OPEC members (mainly Saudi Arabia), hint at a change in OPEC policy.
Key Quotes
“A production cut would be needed to balance the market. On the other hand, US president Trump is calling for higher OPEC production in order to meet demand and push prices even lower. These comments are counterbalancing each other and market participants seem to be affected by both arguments. Currently this results in more or less sideway trading just above the lows set last week.”
“Investors who are bearish look at the rise in US inventories as well as the OPEC’s call for less production in the near term. Both signal oversupply in the near term which would justify lower oil prices.”
“The uncertainty in the oil markets, but surely also the negative sentiment in equity markets triggered a strong selloff in speculative long positions while short positions were increased, but not too much.”
“The upcoming OPEC meeting at 6 December will be crucial for oil price direction in 2019.”
“So, the near term sentiment is clearly negative. During the coming weeks we may continue to test the lows within a smaller sideway trading range, but final direction towards the end of the year and into 2019 must be found in OPEC policy.”
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