 Hello, welcome to this week's CMC Markets Commodity Snapshot with myself Jasper Lawler. This week we are focusing on what everyone's focusing on right now and that's crude oil. We've got the OPEC meeting coming up and the cartel is looking at cutting oil production. We have some interesting charts set up so we want to look at how prices are going to move going forward. So in past snapshots we've been talking about the changing dynamics in the oil market. We've increased supply in that the US now has a shale gas boom in which they're producing a lot more oil and conversely on the demand side China's economy is slowing as is the rest of the world so there's a supply, demand, misbalance and prices have been coming down and Brent crude has actually lost 35% since its highs this year. So that's obviously been a pretty steep decline in prices and so as an oil producing nation particularly these Gulf states that are members of OPEC they get the majority of their government coffers come through the oil revenue so they're taking a big hit right now so in this meeting they're deciding whether to cut production with the hope of addressing that supply side of the balance so as to push prices back up again and hopefully earn more money from selling their oil. So what are they going to do in this meeting? It looks like they're probably not going to cut production we've heard from the Saudi oil minister that he believes the market will stabilize in the near future and there was also a meeting held between Saudi Arabia, Russia, Venezuela and Mexico in which they announced no cut in production they're all big oil producing countries. No cut from them puts the impetus onto OPEC but the general feeling is that probably OPEC aren't going to cut. Why wouldn't they? It's because OPEC's a cartel and a cartel only really works when you control the majority of the market because of the boom in the US they don't control the majority of the market. The US and Russia are two of the largest world producers of oil now and the OPEC countries just don't have the sway they once did. So what can we expect out of this meeting? Let's just look at the scenario if they did do a cut that's not the general market expectation so I think we probably could expect a jump in oil prices in the Brent and the WTI contract were they to cut production? The trouble with that move is as I mentioned longer term even if OPEC countries are cutting production the US and Russia may just increase production so the supply demand dynamics in the market would probably remain and we could still be facing downward pressure on oil prices eventually. So what if they don't cut production? The default assumption is that prices should drop because they're not intervening to proper prices but if we look at the dynamics of the market the market is down 35% in the Brent contract as we mentioned and if you look at the CFTC cot data which tells us the positioning in the futures and options market it just tells us that the market is very short oil right now so if it's very short I mean who left is there to sell more? So what we could see potentially is a sharp spike lower in prices should they fail to cut production but the smart money who's been short the market a long time may use this volatility to close out their short positions and so what we'll be looking at for the dynamics going forward is whether we can close below yesterday's close. If we can that could point to further prices lower if not that could see prices rally back up again. So let's just have a look at the chart for some specific price levels. Now what we're looking at here is a longer term chart of Brent Crudeau it's the weekly candlestick chart and you can see this sharp drop off which says the massive dropping prices that we saw in 2008 which in the steady rise in prices up to around $130 a barrel following that and you can see this last leg down as the price declines that we've seen this year. Now you can see that there are some lows below where we are right now which come in at around $71.25 would be the next level so that would be a level to look out should prices move lower but for me the big one is this $76.10 depending on where we close today after this meeting that should determine direction for prices in the near term. Okay that's it for this week's CMC markets commodity snapshot we were looking at Brent Crudeau the big thing is the OPEC meeting really what we want to see is how prices react to the announcement from the meeting. If they should decide not to cut as his consensus will prices continue to move down in this bearish market or will that be the trigger for a correction higher.