“Doha is only relevant if there is no agreement” — that’s the view of analysts at Citi in a note circulated to clients on Friday
The world’s biggest oil producers will meet in the Qatari capital on Sunday in one of the most hyped events in the world of oil for decades, but Citi isn’t exactly excited about what the meeting will bring. Here’s what the bank has to say (emphasis ours):
Sunday’s producer meeting is all about nothing no matter what agreement might be forged. At best, the agreement will be, as Russia’s energy minister has stated, a gentlemen’s affair, with no binding commitments, no concrete next steps beyond having a review meeting, and no procedure for moving to production cuts.
Producers are ostensibly meeting to discuss whether or not to freeze production — a move designed to address the oversupply in the oil markets right now, and lift prices, but Citi is just the latest bank to dampen expectations going into Sunday’s gathering.
Earlier on Friday, a note from Macquarie noted that it has “muted expectations for any meaningful impact on crude fundamentals from the April 17th Doha meeting.”
Citi backs up its belief that Doha only matters if there is no agreement, saying that it expects a rapid sell-off in oil on Monday should the world’s producers fail to come to terms, and even if there is an agreement, Citi says, oil could sell-off, albeit more slowly. Here’s Citi again (emphasis ours):
If there is no agreement, then expect a sharp oil market sell-off on Monday. If there is an agreement in name but market participants realise it has no teeth, expect a slower sell-off. Main oil-producing countries, but especially Russia, have been stirring the market since late 2015 with talks of a potential agreement and the market has responded frequently, creating periodic froth to prices, only to see prices come off when no agreement has been forthcoming.
So there we have it, don’t get your hopes up …