RE:Can someone explain something to a big dumb rookie?Prices initially went up after the no-deal meeting. According to that narrative, if the cartel couldn’t come to an agreement, a production bump would not happen, thus prices would go up, as market would remain tight. This narrative was always a bit simplistic, if there was that much bad blood between UAE and the rest of OPEC, there was always the risk that they would just unilaterally start producing more, or in a worst case scenario, formally leave the cartel (as they had previous threatened to do, last year).
Following the initial bump in oil price following the no-deal meeting, prices dipped as per the “uncertainty” you described.
Crude further dipped after this week's EIA inventory report…yes there was a an overall drawdown of crude supplies, but a much bigger than expected build in gasoline and distillates inventories, at a time where gasoline demand is suppose to be strongest, which further spooked the market.
Now with a new deal in place, who knows…they have agreed to release more barrels into the market, but in a formalized/disciplined way.
I guess all eyes will be on further inventory reports to see if last week’s big build in refined products was just a one-off or part of a trend.
BizarroJerry1 wrote:
When OPEC had uncertainty around the UAE demands to increase production the prices went down because "uncertainty". They then made the deal and the prices went down again because of rising production. Now there's a new deal and prices are supposed to go up? I'm sure people who get this stuff can make it make sense but I'm confused.