Oil: skeptical on an output freeze - BBH

Analysts at Brown Brothers Harriman explained that comments by a Saudi official suggesting that next month's IEA meeting could be a forum to discuss output cut helped oil prices recover from the supply-induced losses on August 8-9. 

Key Quotes:

"We are skeptical that an output freeze, let alone a cut in output, can be agreed to until Iranian output is closer to what it was before the embargo.  This may take the rest of the year if not a bit longer. 

Open interest in the light sweet oil futures for October has surpassed September, so turn our analysis to it.  It posted its largest weekly advance in four months (~6%).  The technical indicators are constructive; more constructive in our opinion than fundamental factors. The MACD and RSI are trending higher, and the five-day average has crossed above the 20-day average for the first time since late-June.

The October futures contract approached the 38.2% retracement of the decline from the early-June high near $53.  That retracement is found just below $45. The October contract closed above its 200-day moving-average ( $44.55) and stopped shy of its 100-day moving average ($46.50).  A downtrend line off the June and early-July highs also is near  $46.50 at the end of next week, which also corresponds with the 50% retracement objective.  Initial support appears around $43.50."