Crude Oil recap for 23.11.2015
It seems that "whatever it takes" is spreading like cheap candy between people. As it is comfortable to buy some time with this sentence while looking for a meaning, it is also not to be taken serious. As this is a very popular for quite some time in Europe, coming from Draghi's mouth, so the Arabs are looking for an example. And the example is applied in the price of Crude Oil. A "Draghi" was pulled by the Saudis commenting on stabilizing the oil market and that they would cooperate with OPEC and non-OPEC members for stable prices.
The Bloomberg take:
- SAUDI GOVT READY TO DO WHAT IT TAKES FOR STABLE OIL MARKET: SPA
- SAUDI READY TO COOPERATE WITH OPEC, NON-OPEC FOR STABLE PRICES
Prices of WTI jumped nearly 2%, and respectively BRENT also kept up with the pace. Though more likely an misinterpretation of a mistranslation from the original SPA press release stating: "The Cabinet stressed the Kingdom's role in the stability of the oil market, its constant readiness and continuing pursuit to cooperate with all oil producing and exporting countries", worked and everyone was hyped. In the end, it is not clear if the Saudis will slow down their oil output as their main strategy was to put marginal, high cost producers out of the business. It seems more that they are waving the white flag? Most-likely not...
With the initial hype and lifting of the oil prices, in just about 2 hours later, the realization of the news hit hard and WTI tumbled back from 42.60 to 41.40 fast.
Well they tried. But I just hope that this won't turn in-to a habit for everyone else to experiment with statements like these. Market realization hits hard and it hurts.
As for the price itself: Price attacked 42.60-43 and after reality hit, price returned back to the tight range between 42.84 and 41.56. There is a slight potential for a price movement again towards 44.43 if conditions remain positive on the demand side for Oil and fundamentals support it. Yesterday's price bar dropped to low as 40.66 and all day was jumping up and down after a fake brake-out on the "flag" formation, which is currently only the mentioned tight range. 39.51 is for the downside as a first test. Still Oil is resilient and waits for a catalyst and as bears are eager to sell and attack the level, they might wait a little bit for the price to find the needed conditions to set a move.
Anticipate news from the Arabic world and OPEC surrounding their policies.