The market reacted well to OPEC deal
|So, with a small puff of white smoke the Opec contingent have packed their tents and headed to the November 30th meeting with a potential deal up their sleeves. The market reacted well, any deal was unexpected and this, whilst not being worth the paper it isnt written on, satisfies the marketing department in Vienna. The basic facts appear to be, a reduction in production from the current 33.24m b/d to 32.5m b/d which magically pushes the balance into draw territory especially as, having taken the lead, the Saudis manage to get the Russians on board. They are, as I said, taking it back to the full conference at which we are reliably informed other key non-Opec producers will be invited to cooperate, ‘reaching out' as it is being called. But details are thin on the ground, will there be quotas or will the likes of Algeria, Libya, Iran and Nigeria be allowed to produce at will, if so it looks very much like the KSA is back to being the swing producer again? Whatever the situation it cleverly gives the world another two months, maybe more where the oil price risk may now be on the upside...
And if we needed any more reason to get the green pen out then the EIA produce a set of inventory figures that yet again fool the teenage scribblers on the Strasse. Looking for a build of anything up to three million barrels of crude the EIA announced a draw of 1.88m barrels which had the price moving up before news from Algeria started to come out. The product news wasnt so clever with gasoline stocks built by 2m barrels and distillates also higher than one might normally see, even at this time of the year.
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