Early Friday, January crude oil futures are trying to recapture its gains from earlier in the week. After a firm trade on Monday, prices fell over doubts about whether the planned production cuts were enough to reduce supply and stabilize prices.
After three days of lower-lows and two consecutive lower closes, crude oil prices rebounded on Thursday to finish higher for the session. The turnaround was driven by growing optimism that non-OPEC producers might agree to cut output following a cartel agreement to limit production.
Oil traders have already moved past the U.S. Energy Information Administration report and are back to watching an OPEC meeting for clues as to the next direction for prices. Oil producers are scheduled to meet in Vienna on Saturday to see if non-OPEC countries will cut production to reduce a global supply glut that has pressured prices for more than two years.
So we are reduced to playing off a 50/50 news event for the second time in three weeks.
Let’s just state the obvious. If the non-OPEC members come in with acceptable numbers then crude is likely to rise. If they disappoint then crude is likely to break. However, I don’t think the deal will collapse. It will just have to be tweaked again and again until they get it right.
If calling the trade in crude oil a 50/50 proposition sounds like a cop-out then just take a look at the January WTI crude oil chart and you’ll see that the market has been range bound…