Crude Oil Recovers, But Can the Price Hold Above $50?
Crude Oil_OPEC_1105
If you have been reading our reports throughout the past four weeks, especially the ones about Crude Oil, you should not be surprised about the recent rally in both Brent and WTI Crude.
We warned many times that OPEC and Non-OPEC members would not allow the prices to dip lower significantly: Oil producers will do whatever it takes to keep the prices above $50, especially Brent Crude.
A few days ago both crudes dipped lower below key levels, Brent slipped below the $50 mark, while WTI Crude slipped all the way to 45.30’s.
Last week’s report title was “expect OPEC remarks any moment” indeed, whenever the prices slipped below those levels, some producers started to show up on the media, saying that they are very optimistic about reaching a deal to extend the current production cut deal for another six months.
Prices reacted positively to such remarks. However, there was nothing new. We know that there is a high possibility for an extension very soon and it's already priced in.
The rally was limited. At the beginning of this week, the prices dipped back lower to the mentioned levels above. The producers decided that they needed to protect the prices, but the market is not protecting any gains.
Therefore, they decided to push for a new idea, which is to extend the production cut deal beyond 2017 and this is what the Saudi oil minister said yesterday.
As a result, Brent soared all the way back to 50.85 today while WTI Crude is now at $48.
Read more: https://www.orbex.com/blog/2017/05/crude-oil-recovers-can-price-hold-50/