Analysts at Rabobank see strong support for a global coordinated cut in crude oil production to occur, as in effect, it is already happening. They point out any supply cut would likely be dependent on non-OPEC participation.
“We see scope for higher oil prices in the near-term should a global production deal come to fruition. We noted last week that we saw oil prices following two very different trajectories depending on how the price war plays out. This week an abrupt end to the price war is looking more likely and the market will soon find out as the Saudis have called for an emergency meeting between global producers to be held virtually early next week.”
“It is also worth noting that the speculative interest is largely “short” at the moment including trend followers, momentum traders, and “carry” strategies. These “shorts’ are now at risk of giving back a large portion of recent gains should a global supply cut be put in place but much will depend on how quickly the virus related demand losses begin to recover in the weeks and months ahead.”