Expectation of a Crude Production Cut Could Spark A Short Covering Rally

Oil producers will discuss a potential freeze on production  again at an informal  meeting in Sept. 26-28  in Algeria. Last week, The Russian President Putin told Bloomberg it would be the right decision to strike an agreement between oil exporters to support the market. Traders remember how the  last oil exporter meeting in Doha failed to find an agreement causing oil prices to correct down sharply, hence  less expectation this round.

This blog believes that this specially arranged meeting could surprise with a decision to freeze or cut production, because most of the oil major exporters are already producing at maximum capacity. A surprise decision could spark a short covering rally that could cause oil prices to rise at least another $10 to $54.

At the meantime the downside is supported  by expectation of a cut at Algeria. This blog is bullish on oil for the next 2 weeks.

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