Crude oil prices under pressure ahead of Algiers' talks
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Crude oil prices will be very sensitive to any shift in consensus regarding a potential co-ordinated output freeze agreement as OPEC members gather in Algiers this week on the sidelines of an energy conference. The market got carried away last week after rumours that Saudi Arabia and Iran were making progress in agreeing to freeze production, pushing the West Texas Intermediate as high as $46.55 a barrel. However, it did not take long before investors reverse bets as they realised most members were not ready to give up market shares, especially after collapsing price have sent government revenue south. Crude oil prices corrected sharply with the WTI and Brent crude falling roghly 5% on Friday. All oil producers want higher prices to shore up revenue but nobody want to take the cut, it’s a game of chicken.
Most market participants do not expect an agreement at this week OPEC informal meeting. However, prices will remain highly sensitive to any news regarding a potential as it would lay the foundations for a potential agreement at the upcoming official OPEC meeting that will be held on November 30th. Given the market pessimism, the risk is definitely skewed to the upside.
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