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  • WTI is on the back foot following a delay to the highly anticipated OPEC+ meeting. 
  • Markets are otherwise enjoying some recovery amid signs of a slow down in COVID-19 contagion. 

The price of oil has been under some pressure in recent trade considering the delays to the OPEC meeting which had been scheduled for Monday but put back until Thursday. At the time of writing, WTI is trading a $26.69bbls between $26.29bbls and $26.75bbls, below the 3rd April highs of $29.11bbls. 

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If it were not for the delay, we would likely see oil, depending on the outcome of the meeting, marrying up with some of the recoveries we have started to see across the board. 

Risk markets were enjoying some recovery, but markets were potentially too optimistic for the group to reach a negotiated agreement.

“Prices are still holding relatively firm as optimism is high,” analysts at TD Securities noted, “that an eventual deal will be struck, with many referencing the 10m bpd figure. In our view, a double-digit cut is only plausible should the United States participate in the cuts, which at this point, seems to have a high hurdle for success as President Trump’s communications suggest the country is not ready to commit to such an agreement.”

With negotiations ongoing, two-way risks remain particularly high. Nonetheless, the longer it takes to come to an agreement the more inventories swell and the more detrimental the demand shock will prove to be, which suggests even a large cut will not be enough to offset the shock, at least in the near term.

 

Still time for further disputes and delays

However, there has been a loss of 8% amid rising tensions between the world’s biggest oil producers and any further delays to forge a truce and stabilize badly beaten-down energy prices could be very impactful.  Over the weekend, Saudi Arabia and Russia became locked in a dispute, both blaming each other for the collapse in global energy prices, so this could still have some miles to go yet. 

WTI levels