No Surprises from OPEC
There was never a chance that OPEC would cut production today,
meaning there are no real surprises from the outcome of this meeting
resulting in OPEC failing to reach an output deal. While the oil markets
are finding themselves under pressure and encountering selling momentum
as a result of the announcement, it is important to point out that the
oil markets have been meeting sellers around $50 now for the past
fortnight and this is currently seen as a "top" for the commodity.
WTI concludes weekly trading above $50, we are going to be unable to
trade any higher and this is the same as it was when WTI oil failed to
conclude weekly trading above $35 a few months ago and the $42-$44
region a few weeks following.
WTI Oil has found quite a stubborn support level between $47.20-$47.40 and following this would need to break below $44 cleanly for the markets to begin getting anxious that aggressive selling is likely to return as we saw following the previous meeting.
To put it quite simply, there was very little need for OPEC to change
their strategy today and it is important to point out that the price of
oil has rebounded substantially since the milestone lows below $30 at
the beginning of 2016.
There are also reports that major institutions such as OPEC and the IEA are expecting a dramatic decline in global inventories over the second half of 2016, which would be very supportive and positive to the chances of a further comeback in the price of oil for the remainder of the year.