Brent Oil: Continuing To Decline

Brent Oil continued to slide down the charts last week. This followed repeated concerns over an oversupply of Oil and increased USD demand encouraging investors to continue selling. Comments from Saudi Arabian Oil Minister Al-Naimi indicating that Saudi Arabia would not be prepared to cut supply ahead of the highly anticipated OPEC meeting later this month also contributed to Brent’s steep decline. Investors closing USD positions on Friday afternoon led to a pause in selling, with Brent Oil registering its first daily gain in a week and concluding trading just shy from $80.

Looking ahead, there are two events that will likely encourage volatility in Brent Oil. These are the FOMC Minutes (Wednesday) and OPEC Meeting (27th November). If a major oil producer suggests before the OPEC meeting that it would be willing to reduce its production of Oil, it would represent the strongest possibility of Brent recovering a proportion of its recent heavy losses. Similarly, if the FOMC Minutes stalls demand for the Dollar, a consolidation in the Brent Oil price is possible. A hawkish comment would be unexpected, but if it did occur it would probably lead to Brent Oil resuming its downhill tumble.


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