• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 7 days The United States produced more crude oil than any nation, at any time.
  • 5 hours Could Someone Give Me Insights on the Future of Renewable Energy?
  • 7 days How Far Have We Really Gotten With Alternative Energy
  • 10 days James Corbett Interviews Irina Slav of OILPRICE.COM - "Burn, Hollywood, Burn!" - The Corbett Report
  • 10 days The European Union is exceptional in its political divide. Examples are apparent in Hungary, Slovakia, Sweden, Netherlands, Belarus, Ireland, etc.
Uncertainty Drives Investors to Oil Stocks

Uncertainty Drives Investors to Oil Stocks

The reason that investors have…

Editorial Dept

Editorial Dept

More Info

Premium Content

Have Oil Traders Misread Saudi Arabia's Production Cut Commitment?


I have said it many times before in these pages and will no doubt say it many times in the future too, but it is often the case that a traded instrument moves based more on market mood and sentiment than on any hard facts. For traders, “facts” are open to interpretation, and how they are interpreted decides what impact they have on price. However, moods change, and there are reasons to believe that the pessimism around crude that traders are currently exhibiting may be about to shift.

Last weekend, the Saudi government reiterated its commitment to voluntary crude output cuts of 1 million barrels a day, saying that they would continue until at least the end of the year. That is a fact that, on the surface, would seem to be very bullish for oil. Tight supply was the theme in the market from June to September as crude climbed by over thirty percent, so a confirmation of tight supply going forward should be bullish, right?

You would think so…but that announcement came over the weekend, and the 1-week chart for the front-end WTI contract (CL) looks like this…

So, what has changed? Why is what should be bullish news prompting selling?

It is all to do with that malleability of “facts” that I mentioned above. The fact is that the Saudis are continuing with reduced production. But, in the current environment, that is being interpreted as sending a bearish message. “Why would they do that?” is the question…

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News