• WTI surges 8% from 1M low. Ahead of the monthly OPEC report due today, WTI surged 2.7% to US$50.9/barrel (+8% mom) after OPEC said that there is “clear evidence” the market is rebalancing after years of oversupply and that the group remains committed to its goal of reducing global stockpiles. The remarks helped oil prices to rebound after falling 7% from 1M high of 52.9 (28 Sep) to a low of 49.1 (9 Oct) amid concerns that recent US Hurricanes would curb demand from refiners.

• Sentiment was also boosted after Saudi Arabia pledged to cut its November crude oil exports by 7% or 560,000 barrels a day, compared with the same period last year in order to strengthen the market rebalancing process. Meanwhile, market players are looking ahead to a meeting Friday between the OPEC and its allies regarding a possible extension of production caps that expire in March 2018, potentially prolonging them well into the 2H18.

• Poised to stage a LT downtrend line breakout. WTI’s near term outlook has turned positive amid the ascending triangle formation and bullish indicators. Further upside targets are 52.9/53.7/55.0. On the flip side, a violation of 49.1 will witness further retracement towards 47 territory.

Source: Hong Leong Investment Bank Research - 11 Oct 2017