Crude oil prices continue to recover gradually, with Brent has settled above the $67 figure on Friday. Today is the third day of gains in a row, but the bullish impetus still looks too fragile and cautious. The price seems to have found support below $65 earlier this week, however the downside risks are still there and it looks like it’s too early to call a bottom.
Brent has shifted to a recovery mode due to a number of verbal interventions by OPEC+ members who rushed to promise production cuts to stem the sell-off in commodities. The market will be expecting further bullish comments from the cartel ahead of the summit that will take place in three weeks in Vienna.
It looks like the question now is how much output will be cut and for how long. Should the exporters signal that the decline is going to be less than 1.4-1.5 m barrels per day, traders will be disappointed as the US shale production continues to set new records and US sanctions on Iran turned out to be not as tight as was expected.
To stage a robust rally from the current levels, crude oil prices need to see some major production disruptions, bullish weekly EIA data, or a softer Trump’s stance on OPEC and prices. As none of this is expected for now, Brent will proceed with its modest corrective rebound at best, with bearish risks remain.