OPEC+: the beginning of the end

The growth of oil from $ 30 to $ 70 is the merit of OPEC+ (an agreement between a few key oil producers on the cumulative reduction in oil production by 1.8 million barrels per day). The main role in this agreement was played by Saudi Arabia and Russia. The result of OPEC + was the elimination of surpluses from the oil market (world inventories were reduced to the level of a five-year average).

But recently there have been many alarming signals for oil buyers: the oil market participants are increasingly asking: will the OPEC+ deal be extended for 2019? In addition, Russia and Saudi Arabia are increasing production, which analysts interpret as an indirect refusal from OPEC + and in fact the end of this deal.

According to the Wall Street Journal, Saudi Arabia last month increased its oil production by more than 100,000 barrels per day and plans to increase it by at least 100,000 b/d this month. At the same time, according to the consulting company Kpler, which tracks the movement of oil tankers leaving Saudi Arabia, the country has increased oil exports by 300,000 b / d since mid-May. At the same time Russia calls for increasing the quotas for oil production.

As can be seen, conversations about the soon collapse of OPEC + do not appear in an empty place.

Given that US oil production has almost reached 11 million barrels per day, there are reasons to believe that the abandonment of OPEC + and the start of a new market race for a market share will lead to the formation of a medium-term downward trend in oil prices. Now oil is close to the long-term highs, so we consider current prices as extremely attractive for opening mid-term short positions with targets at the bottom of $ 40.

If we talk about more local purposes, for example, this week, then sales in the $ 66 area with lower-end targets of $ 60 also look like an excellent trading opportunity (case of WTI oil). Especially considering that oil reserves in the US have recently increased and exert additional downward pressure on quotes of "black gold".