Originally published by AxiTrader
Reuters reported overnight that OPEC had achieved 82% of its target cut in January with oil production in the 11 member nations who agreed to cut dropping by 958,000 barrels per day.
That's a good start for the 11 members who agreed to cut production to bring the market back toward balance. Importantly it is higher than the usual 60% compliance rate OPEC has achieved in the past.
But the aggregate cut of 82% hides the fact that it is the Saudis, who achieved 116% of their cut, along with Kuwait (90%) and Ecuador (129%) who have inflated the average.
Table via Reuters Eikon
But if you do a quick back of the envelope arithmetic average of the compliance of all 11 nations you get 62.54%.
That begs some questions about whether or not OPEC will achieve its goals.
But it also highlights that the Saudis are once again playing the swing role in OPEC production. Had Saudi Arabia not taken up the production cut slack there is every chance that when this data was released the price of the many oil benchmarks across the globe would have come under heavy selling pressure from traders sure that OPEC would - this time - keep its word.
But as positioning, record net long highs in the speculative community, and the charts suggest the price of oil remains vulnerable. At least in WTI terms.
Overnight the rally in WTI saw a retest of the trendline Crude has slipped out of. Prices would need to get back above last night’s high and above the line to move the focus higher again.
My focus is still on lower prices.
Have a great day's trading.