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By Michael Poulson, A/S Global Risk Management

Yesterday, the Brent crude price took a modest drop as traders allegedly went for profit-taking, on top of a slightly stabilized situation in Iraq.

A week ago, Brent price started a hike on top of news about Iraqi forces marching into the oil rich areas around the city of Kirkuk in northern Iraq. The area has been in Kurdish control and has been part of the Kurdish 600 kbpd of crude oil supply to the global market. As fights between Iraqi and Kurdish forces emerged, about 300 kbpd has been jeopardized and not flowing to the global market.

Currently, the oil flow from the northern part of Iraq is still affected by the disputes between the Iraqi government and the Kurdish government. However, as Brent surged a week ago on top of news about fighting in the oil rich area, the price has now fallen slightly. Yesterday's drop was likely caused by news of Iraqi forces in control of the area, lowering the geopolitical risk and giving traders an incentive to take profits. Furthermore, Bloomberg reported that Iraqi engineers are working on equipment in the oilfields, concluding that it most likely is in Iraqi interest to get the oil flowing as soon as possible.

Looking to the longer term: an OPEC meeting is taking place in Vienna on November 30th, likely with the agenda of discussing an extension of the output curbs from Q1 2018 until the end of 2018. So far, Russia seems to be positive about an extension of the deal, and so does the general secretary of OPEC. Though much can happen prior to the meeting, this is assessed a bullish sign. Additionally, this date seems like the next big pointer on the direction of the oil market, at least in terms of how the current oil market is situated.

Expect today's trade not to make any extreme movements.

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A/S Global Risk Management is a provider of customised hedging solutions for the management of price risk on fuel expenses. The company has offices in Denmark and Singapore. For further details about its risk management products and services, please call +45 88 38 00 00 or email hedging@global-riskmanagement.com.