Summary:

• OPEC agrees to 9-month extension to the current supply cuts
• Libya and Nigeria included in the deal for the first time
• Oil falls to the lowest level of the day despite the extension

As was widely expected, OPEC have announced this afternoon that their current supply cuts will be extended until the end of 2018. For the first time Libya and Nigeria will also be included in the measures to curb output. 

The initial talks amongst the group have now concluded and discussions have just begun with Russia and other non-members. The non-OPEC members could still prove key here with the current reductions from OPEC approximately 1.2M barrels/day and non-OPEC half this at 0.6M barrels/day. 

Libya and Nigeria were previously exempt from the supply cuts due to internal issues which meant that both were running substantially below there maximum output. Having now ramped up production they are, according to an anonymous delegate, set to see their output capped around present levels. 

 Brent Oil has dipped lower following the announcement although the market is yet to make a clear and decisive move. Source: xStation

The market reaction to the news has been relatively subdued with an initial drop seeing some recovery when the finer details regarding Libya and Nigeria were revealed. At the time of writing Brent oil has just turned lower on the day. Given the high expectations and the extreme levels of long positions in the market there could be further declines to come should the OPEC and Russia meeting not yield better than expected results.  

 Brent is finely poised and tonight’s close could well prove decisive in determining the next sustained move. Source: xStation

 Longer term the next clear move in the market could be key as price is currently sat in between the 8 and 21 EMAs on D1. A drop and daily close below this week’s low of 61.93 would see the market end below the 21 period EMA (yellow line)for the first time in almost 2 months. This would offer bears the chance to push home their advantage with a drop below 61.15 paving the way for larger declines. Alternatively if the market reacts positively this evening and can end above 63.40 then the outlook remains favourable for longs and a retest of the 2017 peak at 63.64 could well occur in the coming sessions.