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What next for oil?

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Oil prices spiked on Friday on news from Vienna.

OPEC+ managed to pull off an eleventh-hour agreement, checking all the boxes after a contentious set of meetings. There were a lot of competing interests at play, but the agreement offers a little bit of everything, enough for all parties to walk away satisfied.

The headliner is the 1.2 million-barrel-per-day (mb/d) cut beginning in January, with a review scheduled for April. OPEC will shoulder 800,000 bpd of the total, and non-OPEC countries will take on the other 400,000 bpd. The baseline used to measure the cuts is October production levels.

The cut is larger than some analysts had expected, especially given the rumors swirling on Thursday about a cut of around 1 mb/d. In fact, one could argue that the group cleverly managed market expectations, lowering them on Thursday only to surprise the market with a larger cut on Friday. Prior to the meeting 1.2 mb/d might have been considered a middle-of-the-road cut, but after the seemingly tumultuous set of meetings on Thursday and early Friday, a 1.2 mb/d cut ends up looking like a highly successful result.

OilPrice.com

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Former Craig

Former Craig

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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