Brief history of OPEC's oil market manipulation
|There are some exciting events coming out over the weekend and indeed over next week that are sure to move the price of oil. Leading up to these events we've been seeing massive swings in the market of up to 6% per day.
Oil remains one of the most highly speculative markets for day traders and investors and it responds very well to both technical and fundamental analysis. At the moment, it's the fundamentals that are driving the market.
For your convenience, we've compiled a brief history of OPEC's outright market manipulation and put it on a price chart of oil as a comprehensive timeline.
A. The last meeting that could be considered business as usual. Though there were signs of over-supply, OPEC felt confident in their ability to control the price.
B. Saudi Arabia announces they will not participate in any sort of capacity deal and let the price fall.
C. OPEC starts speculation of an output reduction.
D. In their meeting on June 5th, 2015 it became clear that they were nowhere near any such deal.
E. Despite many attempts leading up to it, the meeting on December 4th again failed to come to any type of agreement.
F. Saudi Arabia & Russia agreed to cut output. However, there were no specifics and the deal was never really finalized. Yet, it managed to save the price of oil, which was trading below $30 a barrel at the time.
G. The price is high, why make any changes? The June 2nd meeting concluded without any headway. Talks of a deal dissolved and so did the price.
H. The price was falling and they needed to do something. OPEC announced an unscheduled meeting to try to cut production again.
I. Finally an agreement on September 28th to cap production to 33 Million barrels per day. However, again no specifics about which countries would be making the cuts.
Since then we haven't heard anything official. Whenever the price gets low rumours start to emerge that there will be a deal and when they get high those rumours seem to dissolve.
In the meantime, oil output from OPEC countries has risen to 34.02 million barrels per day.
In the next few days...
Over the weekend OPEC officials from Algeria will travel to Iran for some closed door meetings. This meeting is really a precursor for OPEC's meeting with Russia on Monday, which is really a precursor to the official OPEC meeting on Wednesday.
If everything goes well and all of the OPEC members plus Russia agree on a deal we could see the price rise above the current $40 to $50 range.
$100 would be extremely unlikely though. During the time that all the above was taking place, China and the US have been concentrating on their own infrastructure and becoming more self-sufficient.
If the deal blows up we could see some very serious consequences in the price and depending on the circumstances some rapid moves for short term trading.
Wishing you an excellent weekend!
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