Oil futures swings between gains and losses during the Asian session this Monday morning, as traders continue to speculate the odds of production cut later this month by OPEC
Crude price have been in decline for weeks now in the lead-up to the Nov 30 OPEC meeting, as doubt intensified over OPEC’s ability to strike a deal. At the same time, some analyst have said that President – Elect Donald Trump’s victory in last week’s US election makes a deal even less likely given the possibility of a restoring domestic energy industry.
“The new dynamic of a highly favorable legislative and most likely fiscal environment for the US upstream and midstream is a parameter that OPEC members would have not have factored in when the proposed cut was introduced,” analyst at BMI research wrote in a note to clients. “We believe they will take a ‘wait and see’ approach this meeting until the US energy policies become clearer in 2017.”
OPEC members had suggested capping output to between 32.5 million and 33 million (bpd) in their meeting in Algeria late September, down from a record 33.83million pumped in October.
Separately, data from China’s statistical agency released Monday showed another fall in Chinese crude production in October. The country produced 16.05 million tons, or about 3.8million (bpd), down 11% from a year ago. So far this year, China’s oil output has fallen 6.7%, due in large part to lower investment in aging fields.
Given there is no immediate change of sentiment, I’d be looking for bearish trend to resume.