What is our trading focus?
OILUKAUG20 – Brent Crude Oil (July)
OILUSJUL20 – WTI Crude Oil (July)
XOP:arcx – Oil & Gas Exploration & Production
XLE:arcx – Energy Select Sector SPDR Fund (Large-cap US energy stocks)
Brent crude oil’s return to a $40/b handle has so far proven to be short-lived. During the past week the oil market has continued to move higher in the belief that the OPEC+ group of producers would extent a deal to curb production. Thereby continuing their support for the market while demand slowly recover.
Saudi Arabia and Russia, the leaders of the group, have preliminary agreed on a one month extension of existing OPEC+ cuts. The problem however is once again what to do with countries that fail to deliver the promised cuts. Moscow, usually a laggard in previous deals, has almost reached its target of 8.5 million barrels/day. That has left the group in a stronger position to demand compliance from others.
Among the OPEC producers Saudi Arabia and the UAE are top in class having cut the number of promised barrels. Nigeria and especially Iraq are still well behind and the OPEC+ group may insist that additional cuts for June and July may include what they failed to cut in May.