Brent displays strong bullish sentiment at present with talk of a potential freeze deal and action to help stabilise the oil market.
Last week's statement released by OPEC (link) has fuelled strong bullish movement on the oil market in recent sessions, with crude oil prices displaying their biggest weekly gains since April. OPEC confirmed that talks will be held next month in regards to taking action to stabilise the oil market, with some belief that a freeze on oil output could still materialise, helping Brent climb above $47/b.
Talks between OPEC members and other major oil producers could help to stabilise the currently volatile market. Khalid Al-Falih, Saudi Arabia's Energy Minister also claimed that oil exporters are in "constant deliberations" in regards to taking decisive action.
Chances of a freeze deal were scuppered last April at the summit in Doha, with differences between Iran and Saudi Arabia the main factor behind the failed talks. Saudi Arabia refused to cap its oil production unless similar action was taken by Iran and other OPEC members. However, Iran increased its production and exportation of crude oil in January as long-standing sanctions were lifted.
Oil production by several firms on the Persian Gulf has hit a record high during the current quarter and 80.6m barrels will need to be processed by refiners as a result, according the International Energy Agency. A freeze deal would help to rectify the unbalanced supply/ demand picture and this in turn would result in a correction on the oil market.
As reported by Bloomberg, Daniel Yergin of information services firm, IHS Markit said: "The market is moving towards balance with a huge overhang. We see supply and demand roughly in balance, and if there are no additional disruptions prices should be in the mid $50s next year."