Cantor Fitzgerald Europe: OPEC meeting could set oil on course for US$60 by year end

"The oil price has rallied somewhat following the joint statement last week from Saudi Arabia and Russia that they will support a production cut into 2018.

"We had anticipated an extension to the supply cut to be announced at this week’s OPEC meeting - at least until the end of the year. The comments made recently have clearly had an additional boost to the futures market.

"There seems to be a little resistance on the price at US$55/bbl, however if OPEC members and a selection of non-OPEC members, notably Russia, abide by the supply cut, the price could conceivably hit US$60/bbl by year end.

"It’s also worth noting that the Saudi’s are in the process of listing Aramco, and therefore will require a stable oil price to support their US$2 trilion valuation of the company, and so it is in their interests to continue with a production cut to do so. The key risk to the downside continues to stem from growing US production, which threatens to replace the cut in supply from Saudi/Russia. A further nine US oil rigs were added last week, bringing the total count up to 712, the most since April 2015, and it is very likely this trend will continue at current oil prices."

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