Update: The machines are in charge and a completely news-less headlines that OPEC’s Economic Commission Board (ECB) recommended the group should cut production by 1.3 million barrels a day from output levels in Oct. 2018, a delegate said, asking not to be named because the meeting is private.
Crucially, ECB deliberations are advisory only and don’t decide policy, AND the figure reflects the over-production forecast by OPEC in its most recent monthly report, published earlier this month... but that didn't stop the algos panic-buying to protect the $50 level...
This surge comes despite plans fading for the creation of a super-OPEC incorporating Russia into a new permanent group as producers favor the simpler option of extending their current alliance again.
As Bloomberg reports, there are no discussions now about forming a permanent structure for a new group and the current system -- based on a six-month pact signed in December 2016 that’s twice been extended -- will continue, Russian Energy Minister Alexander Novak said in an interview with news service Tass published on Friday.
“Most likely, a document will be simply signed on the extension of interaction from 2019 for an indefinite period,” Novak said.
“There is no need to further increase the bureaucratic apparatus” by creating a new secretariat, he said.
To clarify where we stand...
Everyone in OPEC+ agrees oil output should be cut— zerohedge (@zerohedge) November 30, 2018
Nobody in OPEC+ agrees they should be the first to cut
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As we detailed earlier, Oil tanked back below $50 this morning and is headed for its biggest monthly decline in 10 years - less than a month after Goldman herded its clients into the collapsing assets, predicting Brent would hit $80 by the end of the year - as Russia reiterated it’s comfortable with current prices, just a week before it meets with OPEC to discuss possible production curbs.
“As things stand, the Russians and Saudis are still far from being on the same page over the finer details of looming output restrictions,” Stephen Brennock, an analyst at PVM Oil Associates in London, wrote in a report.
“Against this backdrop, the most likely outcome of next week’s OPEC meeting is a fudge.”
Crude's next leg hinges on Saudi Arabia’s dilemma of busting the budget or angering Trump, but as prices plunge, China is grabbing every barrel it can get.
November is now the 2nd worst month for WTI since Jan 1991...
Meanwhile, all eyes are on energy junk bonds: as Goldman wrote overnight, "WTI below $50/bbl will unquestionably constrain risk appetite in the HY market"