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The Tale of the Two Wednesdays

From Algeria to Vienna OPEC meeting

In Algeria on Wednesday 28th September Opec agreed conditionally to reduce the output to between (32.5m -33m b/d) barrels a day .They agreed not to disagree until Wednesday 30th November meeting in Vienna and that surprised oil traders . Brent crude jumped $2.84 a barrel to $48.85.and the graph above ( the price cycle is clear) shows that WTI jumped above the average during the whole period of October. However,Starting from the beginning of November the market is under complete control of the Energy Media ….

Saudi Arabia made it clear that any deal to freeze or cut output is conditional on Iran freezing , Iraq cutting production by 1m b/d and non- opec by 0.5mb/d.

Crude oil Crude oil

Iraq appeared to Russia is now saying “You will not get more than freeze from us , and no Cut” while Saudis is arguing that “ We in OPEC, should agree among ourselves before talking to non-OPEC” , while Iran , has argued that they will continue increasing production until they reach pre-sanction market share see the news below. While Iraq , 5 days before the wedneday OPEC meeting reversed its opposition to output cuts , pushing the WTI price towards the $50 per barrel. This suggests, with Iran, Nigeria, Libya, and Russia being exempted from the deal, that Iraq with 4.7mb/d , can take the price to $57 if they come into term with Saudis.

That is the situation now before 30th November. the graph above shows the delicate situation………and behind every excuse there are the real reasons.The two meetings of OPEC were on Wednesday, the day where EIA always publishes the EIA report at 10:30 am EDT – Eastern Daylight Time . Thanks the meeting is in Vienna on Wednesday, . if Opec walks out as they did in 2014 ,then the EIA report at 10.30 am EDT( Central European Time is 6 hours ahead of Eastern Time), will be very optimistic to stop the bottom falling out of the crude prices While if OPEC walks out with an agreement then the EIA report “will be pessimistic” to stop the market from tearing down the price ceiling. None of those two scenarios are likely, Therefore the only possible scenarioCrude oil will be similar to the Algerian Agreement of September … “ agreeing not to disagree” … the same tactics used by The US Fed.

The Saudi energy minister on Sunday already said that oil market would balance even without output cuts "We expect the level of demand to be encouraging in 2017, and the market will reach balance in 2017 even if there is no intervention by OPEC. But OPEC intervention aims to expedite this balance and the market recovery at a faster pace," he said.

This statement is much similiar to what the former minister of energy said in November 2014 - click here

Last wednesday EIA report shows the WW ( wednesday Window ) se above giving the usual Behavior of picking up after 10.30am data release in spite of an increase in the stock of Gasoline