From ANZ's latest client note on commodites, this on oil
(in brief, bolding mine for emphasis):
- We expect OPEC to ratify the tentative production cut agreement (it reached in Algiers) at its biannual meeting on 30 November. With much disagreement around current baseline production data, we envisage the agreement will state only production cuts required by each member. This should placate members disputing production data such as Iraq. Even though exempt, Iran will be key to this agreement being reached.
- Meanwhile, the rebalancing of the market continues. While disruptions are starting to wane, we still view the risks to further disruptions as high. In fact, it's hard to envisage output from Libya and Nigeria increasing substantially. US output also remains under pressure, although recent declines have tapered off as drilling activity has picked up.
- In the short term, downside risks such as the US presidential election and rate hikes remain strong. Through this period, we expect prices to trade in the USD45-55/bbl range. However, with the market increasingly discounting OPEC reaching an agreement on production cuts, any successful conclusion at the Vienna meeting could see prices push to the top of that range.
