This is an update to our weekend client note that provided an alert regarding a special OPEC meeting this week. OPEC has now confirmed that its Joint Technical Committee (JTC) will meet on February 4-5 (this week) to assess oil markets amid the recent price slide associated with the coronavirus.
It's a significant change in plans since the JTC was not scheduled to meet until early March just before the previously scheduled special OPEC+ meeting on March 5-6. We think it is also a sign that OPEC will move up the March meeting to mid-February to make decisions about deeper cuts. We believe an announcement will be made Tuesday regarding an expedited OPEC+ meeting to February.
As we said in our Hedgeye client note last week, the OPEC+ group and Saudi Arabia will not let oil prices dive without a fight. At a minimum, we are forecasting an extension of the deeper cuts enacted in December to at least June but we believe there is a good possibility that making additional deeper cuts is under active consideration.
For most of 2019 oil prices took a beating because of oil demand concerns resulting from the US-China trade war. A phase-one trade deal and deeper OPEC cuts gave oil prices a lift at the beginning of 2020, but just like whack-a-mole, China demand issues are front and center again with headlines focused on coronavirus.
