Investec’s Head of Commodities, Callum MacPherson, comments on this morning’s OPEC meeting in Vienna:
“Brent touched lows just under 73 $/b yesterday, but has recovered towards 74 $/b, seemingly after Iran went back on an agreement with a Saudi plan to increased production by 600k b/d that had brought prices down yesterday.
“The market is still broadly in its mid 70 $/b range. Moving average and trend-line resistance is in the 75.50 $/b to 76 $/b area which are key levels to look out for on the upside, whereas support comes from recent lows around 72.50 $/b, 100-day average at 71.30 $/b and trend-line support around 70 $/b.
“Some potential outcomes are:
- In the unlikely scenario of an agreement to stick to current limits – very bullish – test 80 $/b
- A modest increase in current country limits totalling 300 to 600k b/d – mildly bullish – test mid to high 70s $/b
- An overall increase in OPEC output of 600k b/d over current production that would be maintained even as Venezuelan/Iranian production falls – bearish – test low 70s $/b
- Increase of 1m to 1.5m – very bearish – test 70 $/b
- A messy failure to agree anything – bearish – test 70 $/b?
Often the devil is in the detail in OPEC agreements, but OPEC don’t always make the detail clear on the day.”