COULD OIL PRICES RISE ABOVE $60/BARREL?

Crude Oil prices trades on the front foot in Asia on expectations the major oil producers will extend the output cut deal.

The question is whether the major producers will extend the deal by 6-months, 9-months or 12-months. The OPEC monitoring committee has proposed nine-month cut extension. a 9-month extension may have been priced-in by the markets. A probability of a 12-month extension is low, although that could push oil prices above $60/barrel.

OPEC needs to change the perception

Whatever OPEC does, it should be enough to change the erroneous perception in the market that the drop in the OPEC and non-OPEC supply (due to an output cut deal) will be fully compensated by US oil producers. Only then, the oil prices could see a sustained break above $60 levels.

A sustained move above $60 could revive reflation trade at a time when the markets are losing confidence in Trump Presidency and China PPI appears to have topped out. That would also make it easy for the Fed to hike rates at a faster pace and also begin the process of balance sheet normalization.

Current Crude Oil Price Status:

Currently, Crude oil is trading at 51.75, up +0.76%, having posted a daily high at 51.93 and low at 51.25.

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