Brent crude trades down to an important level
If oil producers thought that balancing the market would mean higher or stable prices, they're off to a bad start since the deal came into effect.
Brent is now off around $4 since the Jan high and is testing a historical S&R level around $54.
Brent crude daily chart
Reuters sources saying that Iraq's southern exports have been running near record highs for the first 9 days in Jan, despite the cuts won't be helping.
400 ticks isn't a great deal in this market so we're far from panic mode but a break lower here will bring the 50 buck mark into focus. The biggest support before there is around 51.00/20. Break there and we can't start scaling down inflation expectations across the globe.
The key to the deal is everyone toeing the line and not fudging the reporting figures. In the meantime, producers will be hoping that the expected demand materialises to eat into the surplus. The whole things still sounds like one big 'hope' trade to me.
