OPEC Production rise - Short on WTI

For the second consecutive month, the group of oil producers who are not OPEC managed to make the cuts better than those in the alliance. Russia and Mexico are the leading producer countries outside OPEC, which are making the most of their efforts to end the global market saturation. On the next chart, we can closely follow the development of the program by months.

Adherence to the cuts plan remains steadily at around 119% last month, with Russia and Azerbaijan making the most of their efforts while getting to Mexico is hampered by the hurricanes that crossed the region and the two strong earthquakes. Here is a detailed map of the producer countries that succeeded and those who failed to achieve the planned redundancies:

All 21 countries participating in the abatement agreement are trying to reduce their production collectively by almost 1.8m barrels per day, with most of the November levels being the starting point. Iran is allowed to slightly increase its production while Libya and Nigeria are released. Outside OPEC, Russia is responsible for more than half of the restrictions. In the table below, you can track which countries manage to complete the plan and how much in September:

Despite the efforts and success of producing countries, the price of black gold remains under pressure at around $51 a barrel, far from the OPEC target of $57.10. On the chart below, we have compared the production of OPEC to the Brent price, and it is clear that in September the production in the alliance has risen and this is suppressing the price.

Technically, it is clear that the levels of about $53 per barrel are difficult to overcome, and after the formation of a lower peak over the past few days, the probability of observing a decrease is greater. In addition, the price is on a horizontal resistance formed by the medium range, which coincides with 61.8% Fibonacci correction. Demarker has turned from an overproduction zone and pointed down - negative for the price. 50SMA is still below 200SMA - negative for the price.

Alternative Scenario: If the price goes above the horizontal level of resistance, the negative scenario will break and we are more likely to see growth.

A short position on the current levels would be good with Stop Loss at around $54.00 a barrel.

Graphics: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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