Media Error Triggers Significant Oil Price Spike

If you've ever wondered if media headlines and jawboning really influence oil prices, you can now put the question to rest. A mistake in publishing sent oil prices up sharply on Monday morning—but prices have since bounced back to normal levels now that the offending media piece has been removed and a retraction printed.

The Reuters headline wasn't exactly incorrect. "Saudi Arabia's Energy Department will voluntarily extend production cuts until the end of 2024." But we knew that. This is old news that dates back to June 4, when Saudi Arabia agreed to extend its additional voluntary oil cut until next year.

But even just rehashing the old news today like it was some new event sent Brent and WTI up by 2%, with Brent reaching above the important $80 threshold. But that was then. Within the span of less than an hour, crude oil prices returned to earth, and are now trading at a loss for the day.

At 9:48 a.m. ET, WTI was trading down 1.22% on the day, at $74.50. Brent crude had sagged 1.25% back to $78.87 after the market realized that Saudi Arabia wasn't doing anything extra today to prop up prices.

Saudi Arabia has taken action to balance oil supplies with demand, to hear its energy ministry tell it—the result often ending with price hikes. But those moves have recently been quite temporary in nature, failing to keep prices higher.

Not even two weeks ago, Saudi Aramco—the country's state-run oil giant—raised its crude oil prices to its prized market, Asia, for a second month in a row, while cutting production voluntarily by a million barrels per day. Saudi Arabia's Light for August loading is now $3.20 per barrel above Oman/Dubai quotes.

By Julianne Geiger for Oilprice.com

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