OctaFX | OctaFX Forex Broker
Open trading account

Wild times ahead for OPEC – ING

FXStreet (Barcelona) - The Research Team at ING note that OPEC could be left in a state of frenzy ahead of the meeting on 27th November due to increasing US Shale supply and the discord between member nations.

Key Quotes

“With Brent prices last Friday falling below US$80/bbl for the first time since 2010, OPEC’s meeting on 27 November would be the perfect time to announce production cuts. But increasing US shale supply and discord within member nations of OPEC may leave the organisation helplessly flailing.”

“Member states want higher prices to support their budgets, but are unwilling to cut their own production. Libya announced recently it would like OPEC to cut production but wants an exemption for itself. Iran has vowed not to cut a single barrel, and even the current quota of 30 MMbbls/d is widely flouted with actual production as high as 31 MMbbls/d.”

“The only country in a position for discretionary cuts is Saudi Arabia, currently producing 10 MMbbls/d. Yet Saudi Arabia, with healthy current reserves, is also one of the countries best able to handle lower prices. It may also be unwilling to cut production only to see prices fall further, eating into revenues and highlighting OPEC’s inability to control prices in a modern market (we last saw this in 2008 as OPEC increased production but prices kept rising).”

“In the meeting, we believe production cuts will be discussed and some vague agreement will be done on supply control but without any concrete action plan and ineffectual enforcement. This would make the group look more united and provide support for prices, without any on-the-ground impact on production.”

“All told, we believe the house of OPEC is in disarray against an increasingly volatile market.”

GBP/USD inching higher, near 1.5670

The pound is following the broader risk-on trade sentiment at the beginning of the week, pushing GBP/USD to test session highs around 1.5670...
Read more Previous

USD/JPY upward momentum waning – UOB

According to the Analysts at UOB Group, the upward momentum for the USD/JPY pair is waning but it is too early to expect a top just yet.
Read more Next
Start livechat