As you might have noticed, oil prices got a bump over the past 8 days from two things: 1) war, and 2) a headline out of Saudi Arabia that suggested Riyadh backs the extension of production cuts.
Of course we also got the weekly API vs. EIA headline hockey which this week saw the DOE draw (2.16m bbl, so a bigger draw than estimates) overshadowed by rising production and a record stockpile at Cushing resulting, ultimately, in bearish price action.
At the end of the day, it’s always the same story: ramped up US production versus OPEC/non-OPEC production cuts keeping things in a tight range with occasional breakouts induced by either deflationary reality suddenly setting in (see the early March plunge during CERAweek) or some exogenous shock (Trump deciding to test out America’s “brilliant,” “genius” missiles).
As for OPEC there seems to be an underlying “plan” (if you want to call it that) to get to a kind of Goldilocks equilibrium where prices are just high enough to suit the interests of cartel members, but just low enough to keep the US shale complex from going nuts.
That’s the context for a piece out Friday from WSJ, excerpted below.
Via WSJ
