Oil prices are keeping higher on the positive signals so far today
- G20 to create special group to monitor oil-stabilisation moves - report
- Russia reaffirms backing on joint, coordinated action to steady the oil market
- Russia may cut up 2 mil bpd maximum under any global oil pact - sources
So far, there are no hiccup in the headlines and that is keeping oil prices supported ahead of the OPEC+ meeting later at 1400 GMT.
With Russia still sending a supportive message with talk of a possible 2 mil bpd cut (a bit more than yesterday's touted 1.6 mil bpd), that is helping to underpin oil prices along with news of a G20 monitoring committee being set up as well.
The latter news in particular hints that we are going to see a deal come through surely, but the big question is how much will OPEC+ and international producers cut?
Anything around the 10 mil bpd range should just be enough to appease the market and anything between that and 15 mil bpd should give oil prices a brief spike higher. But those figures would feel like peanuts compared to the supply glut we are seeing now.
It will merely slow the bleeding, not stop it altogether.
A cut of around 20 mil bpd or more will send a strong message and while that may not be enough still to address oversupply in the market, it may just buy oil prices some time above $30 in the short-term. But the bigger picture remains the same i.e. fade trade.
At this stage, technicals mean very little as headlines are everything.
But looking at the chart above, oil is keeping above its key hourly moving averages as the near-term bias is turning more bullish again ahead of the OPEC+ meeting.
Further resistance is seen closer to $28 now.
As for the meeting later, don't be alarmed if there is no final decision on output cuts because there is still the G20 energy ministers meeting tomorrow that needs to be concluded before all parties can gauge the relative size of the total output cuts involved.
