Oil prices fell early on Tuesday on doubts that producer cartel OPEC will be able to hammer out a meaningful output cut during a meeting on Wednesday to rein in a global supply overhang and prop up prices, as per Reuters report.
Virendra Chauhan, Oil Analyst, Energy Aspects believes if the deal is struck then there could be an initial knee-jerk reaction and crude prices would rise by even USD 10 per barrel but if there is no deal then it could signal a death of OPEC in many ways and oil would sell off.
OPEC knows that they need to deliver something but the question is in what shape and form but the question is will they manage to get Iran, Iraq to the table, says Chauhan.
According to Chauhan, even if the deal goes through the market participants, traders would want to see an export programme which reflects that supplies from the Middle East or OPEC are down by million barrels a day. So, the prices could shoot up to high 50s and then as details emerge could come off. However, if there is a complete discord like in the Doha meet then one could see market positioning takeover, they short because they may see another year of inventory buildup and so prices would plunge below USD 30 per barrel. However, OPEC and producers globally do not want that.
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