The Brent oil price jumped with broader markets overnight to $49.28. Henry Hub is ripping higher up 5% to $2.88mmBtu:
The oil price was also boosted by a looming strike in Norway. As well, Nigeria’s Delta Avengers want a Brexit referendum and Libya remains bogged down in conflict. Gary Shilling still sees $10:
The Saudis and their Persian Gulf allies continue to play a desperate game of chicken with other major oil producers. Cartels exist to keep prices above equilibrium, which encourages cheating as cartel members exceed their allotted output and other producers take advantage of inflated prices. So the role of the cartel leader, in this case Saudi Arabia, is to cut its own output, neutralizing the cheaters to keep prices up. But the Saudis suffered market-share losses from their previous production cuts. OPEC has effectively abandoned restraints, with total output soaring to as high as 33 million barrels per day at the end of last year.
