RE:RE:RE:Oil Meeting ResultsI think the market is underestimating the value of the talks IMO. The way I look at it is downside risks as follows: 1. Agreement fails, Russia and Saudi continue to increase production (admittedly tough for them to do from current record levels), 2. Shale production fails to decrease (not likely), 3. Demand slows considerably. (??) 4. Iran comes on with far more oil than already priced in - like 1,000,000 barrels within next 6 months (unlikely)
Upside risks to oil: 1. Russia and OPEC agree to cut (now more plausible, though not immediately likely), 2. Shale production starts to decrease (likely), 3. Demand starts to increase faster due to increased global growth (plausible), 4. Geopolitical events in Middle East
IMO, upside risks far more appealing than downside risks. Today's announcement tilted the playing field to upside, though market still seems to be happy to push oil down. I think that shorting oil here is dangerous - upside risks are violent to the upside and downside relatively mild if not already anticipated. Who knows where oil goes, but I think that $20 oil is now far less likely and maybe we test 26 again, but I think that another 3-4 months of oil in this price range will result in serious discussion on cuts. Would not want to be short going into a long weekend like today where Tuesday premarket is a cut announcement. JMO