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Oil Moves Higher, But Traders Remain Cautious

Oil prices legged higher to begin the week after the new Saudi Energy Minister confirmed his arrival would not bring a shift in OPEC policy. To quote, Prince Abdulaziz told reporters “There is nothing radical in Saudi Arabia. We all work for the government… Fundamentally Saudi Arabia’s energy policy is resting on a few pillars. The pillars don’t change.”

The comments seemed to salve oil traders who are nervous the recent Saudi push towards an Aramco IPO could lead to a fraying of relations within OPEC and a loss in motivation for the Saudis to do the brunt of the market balancing work. (We happen to think this will only heighten Saudi resolve to keep the market tight in the coming months.) The boost in oil prices was enough to push global stocks higher as the energy sector lead gains in the S&P 500- an unusual occurrence as the sector has suffered losses of 7% since mid-July while the overall S&P has been flat.

This was an unusual start to the trading week following several months in which oil traders tended to focus on bearish news. Meanwhile, there was, in fact, some negative news for the market to digest in the form of yet another downward revision from the IEA in their global crude demand growth forecast to slightly under 1m bpd for 2019. The research organization had previously forecast 2019 demand growth of 1.4m bpd for the year back in the Fall of 2018 and 1.35m bpd until this Spring giving us all a sharp reminder of…




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