The oil prices have started to recovery on Monday following the truce in the US-China trade war after G20 in Buenos Aires. The summit also helped to both Saudi Arabia and Russia confirmed their cooperation in stabilising oil markets, DailyFX reports.
The Saudi Energy Minister Khalid Al-Falih’s comments appear to be rattling the recent rebound in crude as the official warns that it’s ‘premature’ to adjust production. The oil-rich Kingdom remains to be seen if OPEC and its allies will deliver a major announcement ahead of 2019 as producers ‘figure out what needs to be done and by how much.’
Even Qatar’s announcement on its withdrawal from OPEC next year didn’t touch market too much. Qatar explained its plans to focus on liquified natural gas amid the weakening outlook for global demand.
In fact, the ongoing tilt in retail position provides a contrarian view to crowd sentiment as traders continue to bet on a near-term recovery. As a result, the broader outlook for crude oil remains tilted to the downside as it snaps the upward trend from earlier this year. Meanwhile, OPEC and its allies may attempt to buy time and avoid overemphasizing the recent volatility in oil prices, but sentiment surrounding crude remains skewed as the retail crowd continues to bet on higher oil prices.
Now, the market is waiting for the OPEC meeting in Vienna this Thursday. Market expectations are mixed and divided between a) no change in production levels by OPEC and the mighty partner, Russia, or b) a fresh cut of crude production between 1 and 1.5 mb/d. For Saudis, there is a real dilemma because the country has to choose between market stability in supply and demand.