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OPEC Sets the Stage for A Price Crash

Oil Rig

Friday, September 23 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.


1. Speculators await OPEC meeting

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- Short bets on crude oil surged in late July, corresponding with a crash in crude to the low-$40s per barrel. Then the OPEC rumors in August forced shorts to head for the exits, and long bets soared.
- As we approach the much-anticipated meeting in Algeria, oil speculators are taking a breather. Both long and shorts were cut by mid-September.
- “There’s more uncertainty than usual in the market because of the upcoming meeting. People are waiting for the outcome and a number think this is a good time to stand on the sidelines,” John Kilduff, partner at Again Capital LLC, told Bloomberg.
- The outcome of the Algeria meeting will have an immediate, although likely temporary, impact on oil prices. But after the markets digest the news for a few days, speculators will shift their sights back to the fundamentals, which admittedly do not look good for the rest of this year.

2. OPEC producing near record levels

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- Officials from OPEC and member states have gone to great lengths in recent weeks to downplay the significance…

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