Oil prices are diving on Monday morning in response to a downbeat note from Morgan Stanley.
UK Brent is down 1.93% to $49.90 as of 8.00 a.m. BST (3.00 a.m. ET):
Crude oil is even worse, down 2% to $48.13:
The price of the black stuff is responding to a downbeat note from Morgan Stanley, quashing hopes of a production freeze from OPEC.
Oil had been rallying throughout August, climbing from $41.51 a barrel on August 2 to over $50 a barrel in recent weeks. It was buoyed by comments from Russia and Saudi Arabia hinting that they could freeze or cap production. Russia’s oil minister Alexander Novak told a Saudi newspaper the pair would “put in place joint measures to achieve oil market stability.”
But Adam Longson, head of energy commodity research at Morgan Stanley, said in a recent note that “meaningful OPEC production agreement as highly unlikely”, suggesting that there are simply “too many headwinds and logistical challenges to a meaningful deal.” (You can read more on that note here.)
That means more oil is being pumped out by the likes of Saudi Arabia and Russia, flooding the market with excess capacity. Hence the sliding prices.