Monday 4 April 2016

Look at Doha on April 17

Crude had rallied (+44%) from its thirteen year low on a proposal by the Saudi’s, Russia, Venezuela and Qatar to cap oil output and reduce a global surplus.
The investors again are losing faith in crudes recent rally. Global fundamentals just do not support oil prices. Perhaps more importantly, doubts are growing over whether the major producers will be able to agree on an output freeze in Doha on April 17.
Both WTI and Brent retreated last week (-4%) for the first time since mid-February and remain on the back foot starting this week.
Iran  wants  to continue to produce until they can restore pre-sanction levels. While the Saudi’s Crown Prince Mohammed bin Salman said that his country would freeze their output only if “Iran and other major producers do as well.”
It seems that if an agreement could be reached to freeze output without Iran in Doha, it would not amount to anything.
Futures positions indicate that  traders are again adding to their ‘short’ positions and this after the liquidation of record ‘shorts’ position that were squeezed in the +44% rally over the past two-months.


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