U.S. WTI January Crude Oil futures are trading higher for the week, but the strong upside bias from earlier in the week has slowed considerably as investors express uncertainty over whether OPEC will be able to agree to production cuts at next week’s meeting in Vienna. Due to the thin trading conditions, investors seemed to be a little reluctant to take major positions ahead of Thursday’s U.S. holiday and the long week-end before the official meeting of the cartel.
Nonetheless, despite the mid-week position-squaring, the recent price action suggests that investors are optimistic that a deal will be made. Last week’s major reversal to the upside and this week’s subsequent follow-through rally indicate that some short-sellers have been driven out of the market, perhaps setting the table for a new wave of buyers.
The market is also being supported by a number of key news developments. On Thursday, for example, Azerbaijan Energy Minister Natig Aliyev wrote in a local newspaper that he thinks OPEC will probably propose other producers cut their oil production by 880,000 barrels per day for six-months starting from January 2017.
Russian Energy Minister Alexander Novak said on Thursday that he believes Russia could revise down its 2017 oil production plans if a global output freeze pact comes into force. This plan would effectively cut output by 200,000 to 300,000 barrels per day.
Venezuela’s President Nicholas Maduro said on…