The oil market rallied on Tuesday morning as chatter emerged that Qatar, Venezuela, Saudi Arabia and Russia met to freeze output of oil at January levels. After the brief rally, oil resumed its bearish position as none of the oil producing countries bit the bullet and cut production.
In the same vein, the oversupplied oil market has witnessed no catalyst that has increase demand. Meanwhile, oil prices have continued to flirt within the upper $20 range. Due to no reduction in current output levels, Cooper anticipates that oil prices could still go lower.
There’s at least a 50/50 chance that we test the $26.05 from last week. Then I think we got something in the $22, – $23 type range.”
Low oil prices raise the question of the possible investment risks for energy investors.Cooper argues that the market will remain oversupplied given that the talks are of a production freeze, not a cut. “Freezing at levels that are still way oversupplied, still says you don’t have a re-balance coming anytime soon.
West Texas Intermediate crude rose 2.8 percent to $29.87 a barrel, after sliding 1.4 percent on Tuesday on news of a Saudi-Russia output agreement, the first significant cooperation between OPEC and non-OPEC producers in 15 years. Brent rose 4 percent to $33.43.
Iran’s Oil Minister will meet with counterparts from Iraq, the second-biggest OPEC producer, and Venezuela on Wednesday.