Oil: Long Brent on outsized cheapening post-US NFP, Saudi Aramco output cuts (others to follow)
Oil: Long Brent on outsized cheapening post-US NFP, Saudi Aramco output cuts (others to follow)
Adding to our tactical short USD view this week, we add a long Brent oil position. Brent oil price has not yet recovered after an outsized sell-off last Friday post-US NFP-driven Dollar strength.
News overnight (Bloomberg, 9 Oct-17) about Saudi Aramco's supply cuts is not only a bullish headline (cuts above and beyond add credibility to OPEC output accord) but - importantly - it has the potential to coax other producers to signal similar output cuts before the annual meeting in Vienna (30 Nov).
Details:
Saudi Aramco to cut 560k bpd in customer allocation from Nov to supply 7.15mbpd (v 7.7mbpd demand), expects others to follow
Saudi Aramco supply cuts for Nov = full 290k bpd reduction over/above 486k bpd that it pledged as part of OPEC accord (total 800k)
We watch two key monthly events tomorrow (Wed, 11 Oct) for positive news on demand outlook:
EIA releases monthly short-term energy outlook (STEO, link)
OPEC monthly market report (link)
Calgary Energy Roundtable
Entry: 55.80
Target: >56.87 (14dma)
Stop: <55.1 (9 Oct-17 low)
Time horizon: 1-2wks
Visual: Brent oil (-1mth)
Visual: Brent oil (-6mth)
