Oil: Heaviness in prices - BBH

Research Team at BBH, notes that there is heaviness of oil prices as the Brent is off 0.4% today after completely unwinding Monday's 2.5% rise on Tuesday and Wednesday. 

Key Quotes

“News that OPEC output rose 150k barrels in July, with Saudi Arabia, Kuwait, and UAE producing record amounts took a toll after the US reported a one million barrel inventory build while the expectations for were a drawdown of 1.5 mln barrels.     

We think the risk of a supply agreement among OPEC and non-OPEC members next month is low. Ironically, lack of funding (which is partly related to some continued US sanctions) may be slowing Iran's efforts to boost oil output as quick as it can.  In turn, without regaining pre-embargo levels of output, Iran cannot abide by an output freeze.  Another observation is an insight from game theory.  If an oil producer anticipated that there might be a freeze in output in the coming period, it would make sense to boost output first.”