Category Archives: Energy

Energy

Oil Price Roundtrip, A Headache For OPEC

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.

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