Brent is having a busy week with the OPEC+ decision and IDA’s havoc. IDA storm disturbed the production of the US Gulf Coast platforms. These platforms have a capacity of 1.74 million barrels per day. As the storm weakens eyes turned to OPEC+. Members decide to increase daily production by 400k, every month, until 2022. Rising production is one of the key reasons for the backwardation.
As we discussed in our many previous posts, Brent is pricing at close to a key long-term level. The downtrend from the 2008 crisis still holds power over the Brent. As the backwardation shows, markets expect slightly lower prices in the near future, and the rise of oil prices may come to an end if the trend holds.
But that is not mean a big price is ahead. The uptrend from the start of the pandemic crisis is still ongoing and the down move was denied in August from this trend. 66.53 will be strong support and with the 74.83-76.75 resistances, contraction of prices may resume a little longer. The 3-Month implied volatility is falling too. It is down %8.33 since the start of the year and shows a tighter market for the rest of the year.