Goldman Sachs predicts that the market will react minimally if OPEC+ chooses to increase production at their meeting on Sunday, July 6. This is because traders have already adjusted their expectations, lowering the chances of major market disruptions. Recently, Brent crude oil prices went up due to geopolitical tensions, especially a missile strike on Iranian nuclear facilities. However, the market seems to have already factored in the possibility of greater OPEC+ output. Goldman Sachs believes that decisions from the upcoming OPEC+ meeting are unlikely to lead to significant changes in the market. This situation shows that traders are smoothing out potential volatility before it even happens. Goldman’s comments suggest that markets have already considered the possibility of increased production, particularly from major producers who need to generate more revenue and meet growing domestic needs. The previous increase in Brent crude prices after the missile strike was brief, indicating that investors doubt there will be any long-term disruptions to oil output. For those involved in derivatives trading, the risk from Sunday’s meeting appears reduced. The market has already adjusted, making sharp changes less likely right after the meeting. We expect a stable pricing environment unless something unexpected happens. If production increases, it won’t flood the market immediately due to logistical challenges and staggered implementation. Therefore, it’s important to monitor short-term volatility metrics, which have recently decreased. This suggests that the options market is not preparing for a big move either way. Term structures have adjusted to reflect a more stable outlook, replacing anxiety with patience. As geopolitical shocks become more routine, our focus shifts to future pricing. In August and September, contango has slightly compressed, indicating slow upward price movement without urgency. Some spreads tightened, especially in the immediate three months, showing less enthusiasm for aggressive buying. Given OPEC+’s history of sudden changes, vigilance is important. If we see price adjustments, we should determine whether they stem from headlines or actual shifts in delivery expectations. Reuters indicates this duality, and opportunities often arise from these differences. Using options strategies with defined risks, particularly spreads instead of outright positions, can provide exposure while avoiding extreme risks from policy announcements. A straddle might not offer enough premium unless used tactically in the near term. On the other hand, holding outright positions without protection offers limited reward due to the shrinking window for reactions. In the future, speculative long positions might increase slowly if Brent prices exceed recent highs. However, there are no signs of panic buying or hasty reactions. We have seen this before, such as with November’s cuts, but now the sentiment is more influenced by inventory levels and summer refinery demand. We should keep analyzing positioning data, especially non-commercial interest, as changes here will be more revealing than production agreements. While production can be adjusted quickly, sentiment takes longer to shift. In this sense, patience is not just fitting but necessary. Short-term futures positioning might better reflect market confidence than any headlines after the meeting. Volumes show no significant increase in directional bias, indicating that investors feel ready for what lies ahead.

here to set up a live account on VT Markets now