Oil: a Cyclical Low Seems to Be In - ANZ
Analysts at ANZ explained that movements in oil prices appear to be
having a significant influence on sentiment in financial markets.
"The cyclical low seems to be in, with continued talks of OPEC production cuts amid a decline in US output and inventories. But for prices to hold above USD40/bbl, it seems some of the talk from OPEC will need to be matched with action.
While Saudi Arabia, Qatar, Russia, and Venezuela reached a tentative agreement in February to freeze production, this fell short of expectations of an actual production cut. More recently, Saudi Arabia has said it will only freeze production if it’s joined by other suppliers, including Iran.
However, Iran is only just increasing production following the lifting of economic sanctions and will not want to freeze production. Based on this, the likelihood of any agreement being reached on 17 April to curb production is very low. This leaves a lot of event risk in oil markets, which could recoil quickly. What ultimately needs to be watched is the fundamentals and in this regard they are slowly improving.
(Market News Provided by FXstreet)