Oil Price - Nov 15
Posted: Tue Nov 15, 2016 5:03 pm
Reuters reported this morning that OPEC members (including Iran & Iraq) are making diplomatic moves that increase the chances of an agreement to curb production will be announced November 30. As I pointed out at today's EPG luncheon, it is definitely in the best interest of all OPEC members to reduce exports. A 5% reduction in OPEC oil production could raise oil prices by 15% to 20% quickly. If they don't reach an agreement, the price of oil could dip below $40.
The front month NYMEX contract (December) is getting closer to the expiration date. Speculative traders tighten up their stop loss orders, so any move can trigger a lot of covering and send the price sharply higher. The January and February contracts also moved up more than $2.00/bbl, which is a very good sign.
OPEC members have been reporting higher production recently that does not quite match up with OECD inventory reports. They have a history of over-reporting production ahead of agreements to limit production in an effort to negotiate from a higher number. Lying is just part of the process in Middle Eastern negotiations.
The front month NYMEX contract (December) is getting closer to the expiration date. Speculative traders tighten up their stop loss orders, so any move can trigger a lot of covering and send the price sharply higher. The January and February contracts also moved up more than $2.00/bbl, which is a very good sign.
OPEC members have been reporting higher production recently that does not quite match up with OECD inventory reports. They have a history of over-reporting production ahead of agreements to limit production in an effort to negotiate from a higher number. Lying is just part of the process in Middle Eastern negotiations.