Crude oil prices show a mixed dynamics this week amid the contradictory signals ahead of the crucial OPEC+ summit in Vienna. After the Monday’s rally, Brent dipped yesterday but managed to hold above the $61 threshold that is standing on the way to the key psychologically important support at $60. On Wednesday, the prices quickly derailed the $61 level but met buyers on a dip and turned positive on the day. Despite the current bullish bias, the downside risks are still there.
OPEC members send ambivalent signals to the market, which doesn’t give confidence ahead of the meeting starting tomorrow. The cartel producers and their allies seem to be unable to find common ground, so the expectations are mixed and uncertain. Russia and Saudi Arabia have agreed on the need to cut output but Moscow still opposes to cut by more than 1 million bpd. Meanwhile, Kuwait said OPEC+ nations haven’t yet even discussed proposals to cut production.
Considering a high degree of uncertainty, the path of least resistance for Brent is on the downside in the short term as traders could proceed with profit taking to trim risks. Generally, the market will face a heightened volatility in the days to come, and traders will be disappointed if the group fails to meet their expectations for cuts around 1.3-1.4 million bpd.
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