Doubts surrounding the OPEC meeting tomorrow seem to be the main driver of today’s market. We are currently experiencing a strong fall off on all products: distillates are off over 5 cents, while RBOB is right around the same (11:20 a.m. EST). WTI is also selling off, getting closer to $35 per barrel once again.
Russia confirmed today that it would not be attending the OPEC meeting, but it did infer that meeting with OPEC in the near future could make some sense. Be prepared for a lot of volatility over these next few days, we should be in for quite a ride.
What variables could prevent a successful OPEC meeting tomorrow?
- Which nations should cut & how much they should cut.
- In Asia, OPEC's biggest customer region, oil importers made clear that they would not be happy with an artificial supply cut that hikes prices, and that in case of a cut they would seek more supplies from outside of OPEC (Henning Gloystein).
- Iran/Iraq: do not want to listen to Saudi Arabia, who is telling them to reduce their production.
- This makes it more difficult for OPEC to come to an agreement on who should cut/how much they should cut.
What variables could help bring a successful OPEC meeting tomorrow?
- Market is still oversupplied with product.
- A significant increase in price of crude oil could bring in billions of dollars in revenue to Saudi Arabia, as well as other nations.
Let’s see if the oil cartel can get its act together by tomorrow.