About every other week you will hear something along the lines of “oil hits such-and-such a high as fear of trade war resides”, or “oil drops again over trade war fears”. Every tweet is etched in stone for the day in question. Today is no different, and on this day, oil has hit a three-week high on Trump’s apparent approval of a “phase-one” trade deal with China, despite the fact that Beijing hasn’t exactly confirmed this. Oil also responded to Trump’s reduction in existing tariffs and cancelation of new tariffs that would have gone into effect this Sunday, in return for Beijing’s purchase next year of $50 billion in agro and other products. The market, though, is pretty much like a jilted lover sitting by the phone: Last week, word was that no deal would be forthcoming until after 2020 presidential elections, and then a massive tech cold war was threatened by China in retaliation. The vaguest tweet could send oil back down at any time.
Welcome To Mexico’s Risk-Mitigating Secondary Oil Market
AMLO (as Mexican President Obrador is referred to these days) is causing so much uncertainty in the oil patch that major foreign companies are playing a risk-mitigating game of share swapping because they have no idea what’s about to come next.
As AMLO seeks to return state-run Pemex to its previous monopolistic glory, not only is he not handing out any more concessions, ostensibly until…