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Oil Traders Not Convinced by OPEC, WTI Crude Heads to $75

OPEC officials were to meet last week, but this looked from the beginning it was going to be a disastrous meeting. It was postponed to this week, and the outcome was very unclear, with markets turning bearish eventually on Crude Oil. WTI failed to reach $80 after the initial spike on output cuts news, and then reversed back down close to $75.

Despite the virtual format, comments from OPEC kept coming out. They eventually provided a production cut, albeit it wasn’t obvious how much, and traders were not happy with the ‘voluntary’ nature of the cuts. There were rumours for a 2.1 billion barrel cut, but ended up to around 1.8 billion, which is doubtful.

The Production Cuts for Each Country

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  • Saudi Arabia: 1 million BPD
  • Russia: 500,000 BPD
  • Iraq: 211,000 BPD
  • UAE (United Arab Emirates): 160,000 BPD
  • Kuwait: 135,000 BPD
  • Kazakhstan: 82,000 BPD
  • Algeria: 51,000 BPD
  • Oman: 42,000 BPD

If the Russian and Saudi Arabian cut extensions are excluded, the around 680K barrels per day. That falls short of expectations, but it’s certainly more than was projected a few weeks ago, so we saw a jump higher at first, before the prices began to fall. The Oil market reacted negatively to the reduction, although it did try to jump, with WTI crude reaching $76.80, up from $75.05 at the lows, before pulling back down and closing the day below $76.

US WTI Crude Oil

WTI
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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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