For oil traders, speculators and indeed corporate buyers, the price action on the daily oil chart reflects a confused picture for crude oil, and to mix metaphors for a moment, the waters have been muddied and remain confused and uncertain.
Crude oil prices surged a huge $3 dollars or 5% higher at the Asian open with Brent briefly trading north of $57 and WTI above $54 a barrel before pulling back slightly.
For obvious reasons, all the focus is on the OPEC meeting. As we pointed out the possibility yesterday, oil prices have bounced back very strongly today on renewed hopes that oil ministers will, after all, be able to hammer out a deal later on to limit crude production.
After months of uncertainty and speculation you would think there will be some clarity about the crude oil situation just days ahead of Wednesday’s OPEC meeting. Well, you would be wrong. In fact, very wrong.
It is safe to say that markets don’t like uncertainty but this is on another level. Fears that Donald Trump was going to win the election saw risk-sensitive assets drop faster than Hillary Clinton’s hopes of becoming the next US President overnight.
Crude oil, like many other commodities and markets are present, continues to remain rangebound with the bullish momentum of earlier in the month now waning.
At the start of a week full of US earnings, important economic data and a couple of central bank meetings, risk is somewhat off the menu. Equities, copper and, to a lesser degree, oil prices were all trading lower at the time of this writing.
Crude prices jumped in reaction to the latest weekly US crude stockpiles data but then quickly went into reverse gear, before bounce back once again.
Ahead of next week’s talks in Algeria, Reuters reported this morning that Saudi Arabia is apparently willing to reduce its oil output for as long as Iran agrees to freeze its production at current levels.
Oil prices have been extremely volatile of late, without making any significant progress in either direction. The long and short of it is that the stream of mostly negative news has helped to halt the recent rally, while ahead of this month’s informal meeting of the OPEC in Algeria not many people will want to be betting boldly on an oil price plunge. Therefore consolidation is the dominant theme in
