In the lead-up to the OPEC meeting, two things were happening. Analysts were saying OPEC would/should cut production and oil ministers from the key Persian Gulf countries were saying production would be unchanged.
The headlines from the past two days were a steady parade of oil ministers and newswire sources doing everything but promising quotas would be unchanged.
On Tuesday I wrote:
I’m reading research from SocGen talking about a 60% chance of a production cut on Thursday but I just don’t see it. I think it’s more like 5% but it’s hard to get a good read on market pricing.
With the fall in oil leading up to the OPEC decision, I thought the market had got the message but the lesson — once again — is to never overestimate the intelligence of the oil market.
Overall, oil might be getting washed out here in a thin holiday market and the momentum trade is certainly a factor so there’s no sense fighting this move.
WTI crude oil — what a dive
