So asks the WSJ today:
A now-familiar pattern ensued Monday after Venezuelan President Nicolás Maduro said the world’s big oil producers were close to clinching an output deal—oil prices rose more than 1% early that day, and then quickly fell, posting losses by Tuesday.
It was among the most recent in a series of optimistic assessments about a potential deal by members of the Organization of the Petroleum Exporting Countries. But oil traders and analysts increasingly see the statements as an OPEC ploy to prop up prices short term.
…The strategy of talking up prices is arguably the last arrow in OPEC’s quiver. The cartel once saw its role as an oil-price maker, able to swing the market up or down by regulating its own production to match global demand. But an American oil boom made OPEC’s production less relevant to prices, and OPEC members like Saudi Arabia are now instead competing fiercely to maintain their share of the market by pumping full tilt.
“It baffles me that people still take those statements seriously,” said Tom Pugh, a commodities analyst at Capital Economics. “There’s never any detail, never any confirmation and it’s always the same characters.”
Libya, Nigeria and Iran are all still below there output targets, though the latter is creeping closer. None is signing on to any “freeze”. Hilariously, Venezualan production has also fallen sharply in the past year so a freeze is really the last thing that it needs.
There’s no multi-lateral action coming on oil. That leaves unilateral or bilateral. But Saudi does not want to give Iran any market share so that’s really the end of it. At least until Iran’s recovery is topped out but then it plans to go higher anyway!
I remain of the view that oil will fall sharply in the months ahead.
