Oil: More production cuts and possible US-China deal to provide support – Rabobank

Crude oil prices rose following the OPEC+ meeting. According to analysts at Rabobank, the deeper cuts should also a tailwind for oil prices going into 2020 especially.

Key Quotes: 

“The much awaited OPEC+ meeting has come and gone without much hoopla. The outcome of the overly-hyped event was mostly in-line with our base case forecast of stricter adherence to the current supply agreement and the Saudis agreeing to keep their production at 9.7mb/d. There was a great deal of speculation in the lead up to the meeting with some even suggesting that the Saudis were ready to reverse course and increase production given that other OPEC members were not satisfying their end of the deal.”

“We are encouraged by the recent price action despite the fundamental data coming in on the weaker side of expectations. We fully expect commercial crude inventories in the US will hit multi-year lows in the near future – a milestone already accomplished when looking at total US crude stocks inclusive of the SPR. The recent announcement of deeper cuts by the OPEC+ members should also provide a tailwind for oil prices going into 2020 especially if the USChina come to an agreement on phase one of the larger trade deal being discussed.”