• 5 minutes Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 11 minutes Saudi Fund Wants to Take Tesla Private?
  • 17 minutes Starvation, horror in Venezuela
  • 2 hours WTI @ 67.50, charts show $62.50 next
  • 54 mins Mike Shellman's musings on "Cartoon of the Week"
  • 1 hour Newspaper Editorials Across U.S. Rebuke Trump For Attacks On Press
  • 1 hour Venezuela set to raise gasoline prices to international levels.
  • 6 hours WTI @ 69.33 headed for $70s - $80s end of August
  • 40 mins Batteries Could Be a Small Dotcom-Style Bubble
  • 48 mins Scottish Battery ‘Breakthrough’ Could Charge Electric Cars In Seconds
  • 8 hours Renewable Energy Could "Effectively Be Free" by 2030
  • 7 hours Corporations Are Buying More Renewables Than Ever
  • 23 hours Oil prices---Tug of War: Sanctions vs. Trade War
  • 22 hours California Solar Mandate Based on False Facts
  • 12 hours Don't Expect Too Much: Despite a Soaring Economy, America's Annual Pay Increase Isn't Budging
  • 12 hours Again Google: Brazil May Probe Google Over Its Cell Phone System
Alt Text

Turkey Turmoil Drags Oil Down

While Turkey might not be…

Alt Text

Iran’s Latest Tactic To Save Market Share

Iran cut oil prices for…

Martin Tillier

Martin Tillier

More Info

Trending Discussions

The Reaction To The OPEC Deal Extension Is Logical, But Flawed

Those new to financial markets, and energy trading in particular, were probably somewhat puzzled by the price action in oil futures this week following the announcement by OPEC and some influential non-OPEC nations that they are extending the production cuts agreed last year for another nine months, until the end of Q1 2018. The logical reaction to that news would have been a spike in oil, but instead we saw a dramatic decline of around five percent once the announcement was made. That is easily explained in terms of trading dynamics, but one question remains. Is it a sign that we are heading lower or does it represent a good short-term buying opportunity?

(Click to enlarge)

“But the rumor, sell the fact” patterns like this are extremely common, and are the logical result of declaring the intent to enact a policy before actually doing so. Various OPEC members have made it clear over the last couple of weeks that an agreement was coming, so traders inevitably positioned themselves for that in advance of any actual announcement. Those statements, however, also set the rumor mill grinding and the whispers began to assume that more was coming. The market began to price in deeper cuts, which were never indicated, and when they did not come the extension became a negative for oil. All those traders that had taken long positions rushed to get out, and the ensuing results can be seen on the chart. That proves a point that I have often made here,…

To read the full article

Please sign up and become a premium OilPrice.com member to gain access to read the full article.

RegisterLogin

Trending Discussions





Oilprice - The No. 1 Source for Oil & Energy News