The Joint OPEC-non-OPEC Ministerial Monitoring Committee (JMMC) seems to have taken the market by surprise. I knew the price would be trending up, but I didn’t realise it would do it so soon, after this one meeting. I had expected it to only start rising properly in early Nov 2018. This makes future trades clearer as the bull signal seems to overweigh the bear signals. However, it does affect my previous forecasts and trades I previously predicted a cap the price of oil. Still, I won’t expect any large movements up or down till Nov.

Forecasting Checklist

• Oil industry news
  • Political Plays?
    • The USA China Trade War saga continues.
      • But it doesn’t seem to make much of an impact any more. Either the market has priced it in, or that people are not suspecting that demand will be affected that badly.
    • The JMMC resulted in OPEC saying that though it will increase production, it will do so based on the demand that they observe, and not due to USA’s request.
      • The meeting results immediately increased prices. ^
      • It seems that Saudi and Russia are going to do what they want earlier than I predicted.
      • With this and the lessening impact of the trade war, it seems that there are few downside pressures on the oil price. ^
    • I do realise that a lot of these predictions rely on the sanctions on Iran continuing. There is a possibility, though small, that USA will remove their sanctions on Iran as this will lead to the lower oil prices that they want for their election.
  • Level of uncertainty?
    • This is still high and will only start resolving itself starting in Nov.
    • USA stock markets are just below record highs.
  • Upcoming events/meetings?
    • US Midterm elections: 6 Nov 2018
    • Hard deadline on Iran sanctions: 4 Nov 2018
    • The JMMC just past over the last weekend
  • Oil discoveries or disruptions?
    • Although USA is producing as much oil as Russia and Saudi, it seems they have an oil pipeline bottleneck issue. This means, their additional production isn’t exactly increasing real supply. ^
    • This article reports that with higher prices would come more investments in oil infrastructure. This could do things such as alleviate USA’s pipeline bottleneck issues. Regardless of timing, it seems that $100 would be a possibility as there currently is no short-term solution to meet the disappearance of Iranian oil.
• Check status of economies
  • Oil demand?
    • See above comment on trade war
    • Saudi has commented that they see demand remaining strong and increasing slightly in the next three months. ^
• Check other charts for movement
  • USD
    • USA has been on an uptrend. v
  • Gold
    • Gold has been more or less flat recently.
• Technical analysis
  • There seems to be a price support at the $64-65 level. ^
  • IV percentile is lowering
  • TTM_LRC ranges
    • WTI prices are now in the upper 1SD range
• Check Chart discrepancies
  • Quarterly expiry of futures and next futures chart
  • Gap between WTI and Brent
    • The price gap widens slightly again. ^

The Forecast

I believe now that Saudi and Russia have indicated that they will pump as much oil as their want, they will let the prices float to the $80 Brent that previously said they are comfortable with. This would mean that the price is generally bullish. The WTI price is currently about $72.16.

• I am 84% confident that the price of WTI oil will not be below $65 on 14/11/2018.