•Opec had “one of its worst meetings ….. ever” in the words of the Saudi Oil Minister. The cartel agreed to disagree on the state of the market after the Saudi’s failed to convince the others to raise production to meet the higher prices. The Saudi’s had proposed raising production by 1.5 million barrels/day.
•Prices jumped as a result, which is not surprising, but its unlikely to lead to a sustained push higher (just yet). Its more likely to be a short-lived move:
1.Demand is slowing, and the market is already marginally oversupplied.
2.Saudia Arabia essentially holds “a put option” and are now free to increase production if prices do rise too fast, without worrying that OPEC will be on top of them.
3.The IEA (International Energy Agency) has a formidable stockpile and has officially said it is prepared to supply additional barrels if needed.I wouldn’t jump into crude just yet …..
-------------------------------------------------------------------------------------------------------------------------------------LEGAL DISCLAIMER: The views mentioned above are purely that of the author, and does not necessarily reflect the official view of Goldrock Capital or employees. Unless of course the aforementioned view was a phenomenally good call, with exquisite market timing, in which case Goldrock Capital reserves the right to all credit!!!!!
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