- OPEC+ unofficially agree to 2.2 million barrel per day cut
- Full compliance with cuts already looks unlikely
- Brent continues to consolidate near recent lows
Oil prices remain quite volatile but more importantly, not too far from their recent lows after traders judged yesterday’s announcement from OPEC+ with some skepticism.
The lack of an official announcement, with details gradually appearing from individual member states indicated there’s no firm commitment to the 2.2 million barrel per day cut. And Angola insisting straight after it won’t comply further solidified that view.
Saudi Arabia will be hoping that others will, in the main comply, after it committed to extending its one million barrel cut until the end of March, while Russia increased its export reduction from 300,000 to 500,000.
But it seems traders either aren’t buying that members will be compliant or don’t view it as being sufficient. Or, of course, that the lack of formal commitment hints at fractures within the alliance which could impact its ability to hit its targets, let alone cut further if necessary.
If Brent breaks below its November lows, it will be perfectly clear what markets think of the deal.
rent was testing a big area of resistance ahead of the OPEC+ announcement but has since headed lower creating a very interesting setup.
Brent Crude Daily
Source – OANDA on Trading View
An imperfect inverse head and shoulders appears to be forming with the neckline around the 200/233-day simple moving average band (red). It was also an important area of support over the last few months.
A move below the recent lows around $77 though would be a very bearish development, especially against the backdrop of the OPEC+ deal.
