Constructive banter from OPEC nations are to be expected leading up to the next key meeting in June. The outcome of the Jeddah talks shows that OPEC + members are on board to continuing production cuts throughout the rest of year, albeit if conditions warrant it. Uncertainty on both the global demand front and stockpiles from Iran Venezuela and Libya will likely keep things volatile and possibly see oil-producing nations punt the 176th extraordinary meeting again, from June to July. Saudi Arabia does not want a repeat from last year, when too many barrels came back to the market.
Geopolitics will remain key for oil and while the focus early this week lies with global growth concerns from an escalating trading war between China and the US, short-term differentials between spare capacity and output at risk should keep prices somewhat supported.
The OPEC + meeting over the weekend did not yield any surprises, with the most important comments coming from Russia, the most important non-OPEC partner in the coalition, hinting they could reduce production cuts if the market needs more crude.
The base case is slowly becoming OPEC and its partners will announce an extension of production cuts, especially if global growth concerns grow. Russian could decide to argue they do not want to take part with further cuts, or they could just not comply.
Choppy conditions remain in place for crude traders, with upside relying on geopolitical events driving shocks to supplies.
West Texas Intermediate crude could be vulnerable to a move towards $60 a barrel, but if the bullish move continues, $69.50 could be major resistance. The Canadian dollar is slightly firmer on the day against both the euro and US dollar.
