Brent ended last week 3.7% higher but its staggering rally in the past month suggests long specs are set to unwind a fair amount of their position.
OPEC+ meeting this Thursday will determine how much supply curbs are eased. Strategists at OCBC Bank think if the combined increase does not exceed 500kbpd, that will be bullish for prices.
Key quotes
“The sell-off on Friday could just be the beginning of a deeper correction but we view this largely as technical. Crack margins have continued to trend higher despite the sell-off.”
“We would choose to do a tactical short on the market early this week but will want to remain more neutral by Wednesday, as markets await the output decision from OPEC+. We expect markets to resume its trend higher if the total output increase does not exceed 500kbpd (a total of 1.5mbpd is on the cards).”
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