Between risk-on sentiment from Comey’s latest bombshell and the earthquake in Cushing overnight, WTI crude prices rallied to $44.99 but as OilPrice.com’s Gregory Brew notes that in the midst of a week of bad to terrible news for oil prices, OPEC tried and failed to alleviate concerns that its meeting this November will, in fact, produce a meaningful deal on production cuts.
‘We remain deeply optimistic about the possibility that the Algiers agreement will be complemented by precise, decisive action among all producers,’ announced OPEC via its regular publication, ‘OPEC Bulletin.’ The announcement came as industry analysts and pundits criticized the organization, casting doubt on its ability to deliver a deal on a production freeze. OPEC was also very visibly lashing out at critics who have criticized its ability to influence markets in a substantive way.
The September announcement helped push prices past $50 for over a week, before they plunged back down to $44 this week. The decline was largely attributed to massive inventory build reports from the EIA and API. The zig-zagging of prices mirrors a similar trend from last April, when an anticipated OPEC freeze deal at Doha helped send prices up before disagreements between Saudi Arabia and Iran caused Riyadh to scupper the deal, leaving markets to tumble.
At this point, with an imminent OPEC meeting and consistently weak fundamentals, serious investors need to ask themselves: why trust OPEC? Why place any confidence in its ability to manage production or influence the market to send prices in positive directions?
This post was published at Zero Hedge on Nov 7, 2016.