Qatar withdrawal from #OPEC is a monumental event that signals the likely end of the cartel. Watch my interview at @WIONews India. Continue reading OPEC’s Dilemma. Qatar withdrawal from OPEC is a monumental event.
Oil prices surged into the third quarter due to a combination of factors:
- Artificial supply manipulation, as OPEC maintained production cuts despite healthy demand and better inventories. We discussed it here.
- Strong leveraged buying based on reflation expectations. As the graph below shows, net length in crude oil rose significantly, only to fall abruptly as rates rise.
- Excessively optimistic demand growth estimates. In the past three months, we have seen demand estimates slashed by brokers who, at the same time, kept bullish estimates of oil prices into 2019.
While markets become increasingly bullish, oil prices are close to a “warning zone” where the barrel could be one -if not the only- catalyst of a major slowdown. Continue reading Is The Oil Burden A Rising Problem?
The fundamental problem of the last OPEC meeting is the evidence of the division between two groups. One, led by Iran, which wants higher prices and deeper cuts, and the two largest producers, Saudi Arabia and Russia, who support a more diplomatic position. Continue reading OPEC’s Dilemma