The Joint Ministerial Monitoring Committee (JMMC) of OPEC, under the Chairmanship of HRH Prince Abdul Aziz Bin Salman, Saudi Arabia's Minister of Energy, and Co-Chair HE Alexander Novak, Minister of Energy of the Russian Federation, is scheduled to hold its 24th Meeting this Tuesday.
The Committee is going to evaluate the extent to which the combined efforts of all OPEC and non-OPEC member-states have contributed to rebalancing the shaken energy market in October, under the Declaration of Cooperation (DoC).
At the last meeting of the JMMC, it was stated that:
" The Committee reaffirmed the commitments of all participating countries to achieve full conformity and make up for any shortfalls under compensation plans presented to the Committee for an extended period through December 2020. […] The Committee reviewed the crude oil production data for the month of September 2020 and welcomed the positive performance in the overall conformity level for participating OPEC and non-OPEC Countries, at 102 per cent."
The Committee is determined to strengthen the oil market by exacting extensive and proportional production cuts by all members, in order to cushion the adverse impact of any potential disruptions to the underlying supply and demand equilibrium, on the condition that the pandemic causes another global downturn.
That is why the impact of Tuesday's review on the price of crude oil is going to be largely dependent on the level of recorded conformity amongst the members.
" The JMMC underlined that underperformance is not only unfair to other performing countries, but it is also detrimental to oil market rebalancing."
Consequently, any recorded underperformance in October could cause the price of the commodity to fall on the threat of excessive supply. Conversely, if the JMMC reports the continuation of September's conformity trend, the current bullish momentum of crude's price is likely to be extended as a result.
The other major event taking place on Tuesday will be the release of the US retail sales data, which is compiled by the Census Bureau. According to the preliminary market forecasts, the index is expected to fall marginally from a month prior.
Retail sales rose by nearly 2 per cent in September owing to a wave of lifted governmental restrictions, which allowed the economic activity to pick up. However, in light of the turbulent presidential race in October, which hadn`t even peaked at that time, retail sales are expected to ease down to only 0.5 per cent.
On Thursday, the Australian Bureau of Statistics (ABS) is scheduled to publish its monthly employment survey. According to the preliminary market forecasts, headline unemployment is expected to edge higher to 7.1 per cent in October.
Meanwhile, the 4H chart below outlines the likely future developments for crude oil's price action after the OPEC-JMMC meeting. The chart is taken directly from the last analysis of the precious commodity.
If Tuesday's meeting report demonstrates that the member and non-member states of OPEC have reached the required conformity as regards production cuts are concerned, the price of crude is likely to continue rising.
Conversely, if additional discord is reported, the price action is likely to tumble towards the 23.6 per cent Fibonacci retracement level at 37.81 after breaking down below the Support Area (in blue).
Monday – RBA Governor Lowe Speaks; Chinese m/m Retail Sales.
Tuesday – RBA Monetary Policy Minutes; BOE Governor Bailey Speaks; BOC Governor Macklem Speaks.
Wednesday – m/m CPI in Canada; m/m CPI in the UK.
Thursday – US Unemployment Claims; ADP Non-Farm in Canada.
Friday – m/m Retail Sales in the UK; m/m Retail Sales in Canada; New Zealand General Election.