And there you go... we cut into the quotas: -1 million barrels per day from July and an additional -1.4 million from January 2024, just to anticipating next year's recession.
We had been warned... :-)
How is it that specialists in trading, macroeconomics, oil... write 48 hours before the fateful date "that they do not think that quota cuts will take place on Sunday at the OPEC+ meeting..." And we are talking about specialists from JP Morgan and Reuters among others.
For April 3rd, in a pinch... I could conceive that these specialists could have had their heads elsewhere, blinders and missed all the signals from OPEC which announced the cuts in production quotas... in a pinch...
BUT There... Hello what... Saudi Arabia's energy minister verbalized it and warned short sellers directly! You guys are going to be "OUCHING"... Abdelaziz, however, you warned... He even invented a word that does not exist in the dictionary so that it is visual enough for traders (see my penultimate post: "ABBLE or not ABBLE?").
I fell out of my chair when I read in the press that there are still specialists who are surprised by "this surprise haircut".... but one surprise... it's when you don't say anything... when you announce it to the whole world in a press conference... how can you call it a surprise?
It's a concept that's beyond me.
In any case, the "surprise" generated on April 3 had made the market react emotionally with a jump of +$5.50 in Brent at its opening on Monday. .. while this time it was only +$1.30.
And yet... the cut comes at the worst time of the year, peak driving season!
Traders are truly a breed apart...when they are convinced of something...and even though all the soft and hard data is published in one way, if they are convinced of the contrary they will go in the opposite direction... their belief and conviction will always be stronger than the reality of the market. And yet, it is always the market that is right, we learn that from the start of trading. Never have conviction!
When I was 15, my father was transferred to Dubai; since my adolescence I learned to know the mentality of the East and the Arab countries. Then I myself worked there... well I can tell you that when a prince or an emir tells you something, he never bluffs!
When the Minister of Energy, Prince Abdelaziz ben Salman, warns with "so much delicacy" the short sellers of hedge funds, and in a particularly American filigram, it's not a bluff.
Besides, after this announcement, the price of a barrel had jumped by +$3 to $77 for Brent but fell fairly quickly to $72.50 a few days later ...
Serious guys? What did you not understand? It sounded clear though
message ^^.
Do you think OPEC is meeting 23 ministers in Vienna just to chat and drink coffee?
NO...I don't think so. This face-to-face meeting already felt the cut in production quotas and in passing the reframing of Russia, which had somewhat gone it alone in its last months by snubbing their production cut and consequently undermining all the efforts of the other OPEC producers. .
But Saudi Arabia as "Boss" was able to reframe, and we imagine with all its legendary delicacy, this lone rider to return to the ranks . Thus Russia reiterates and certifies that its cut of - 500,000 barrels per day will be well done and honored.
In passing, note that the famous American and English newspapers which had published a few days rather have information on the OPEC meeting from trusted, internal sources, but wanted to remain anonymous ( yeah...) had mentioned that there would be no quota cuts !
Ah bah... well, precisely... neither Bloomberg, nor Reuters nor even the Wall Street Journal received invitations and accreditations to cover the OPEC meeting...how weird...however the Sputnik media (no need to tell you what country is this newspaper) received one!
Now the new quota cut is here! Saudi Arabia cuts 1 million barrels per day from its production in July. This follows that of the OPEC cartel last October of -2 million barrels per day and April of -1.6 million barrels, or -4.6 million barrels per day.
This time it's approaching peak driving season in the USA...which means more demand for jet fuel and gasoline and in theory the US government had announced that it would replenish its strategic oil reserves in July for August purchases.
But unlike Saudi Arabia, I'm less certain that this announcement is intended as a promise... the USA often changes its mind after its announcement, they, on the other hand, have the art of bluffing. They have already announced this purchase for 2 times for the retraction afterwards (maintenance and cleaning problem it seems...).
But don't worry, dear short sellers... if you have a few barrels left on your hands, I think you'll just have to arm yourself with a little patience so that the price of the barrel goes down again soon ;-)... Even if the debt ceiling crisis is behind us... we still have many others lurking in the shadows like that of US real estate which will soon explode in our hands and that of regional banks, still in the US, definitely... because don't expect the FED to pivot anytime soon given the hard data of recent days. ..
Continued on the next episode.
I love oil, it's exciting!
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