Market response to OPEC inaction shows cheaper oil here to stay

It was no great surprise that OPEC left its output target unchanged today, so the fact that global oil prices still took another large tumble towards our long-held forecast of $70 per barrel underlines how negative the sentiment in the market has become. Indeed, Brent is now down at $73, while the traditional US benchmark, WTI, is already back below $70. Our view is that this immediate reaction is overdone, but there can be little remaining doubt that lower oil prices are here to stay.