Commodity Update; Crude Oil – 19 September 2014

Crude prices break from six weeks of losses on likelihood of OPEC action

Brent and WTI crude prices broke with their nascent tradition to close the week higher on Friday. This was as the latest contract roll over on the futures market added $1.5 to the price of a barrel, while expectations also began to build among investors that OPEC could soon take action if prices were to fall further.  

In further detail, the OPEC Secretary-General El-Badri stated at a press conference during the week that OPEC could lower production by as much as 500,000 barrels per day in the Autumn in order to prop up prices.

While the next meeting for OPEC members is not until 27 November, the price of Brent Crude has remained consistently below the $100 break even budget price for OPEC nations in recent weeks.

With El-Badri’s comments taken into account, we now believe that investors will begin to awaken to the possibility of OPEC intervention this winter. Consequently, we continue to expect strong support for prices at $97 per barrel and for a directional bias toward the upside from here.

Brent Crude

BRENT19

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