WTI extended gains today after OPEC signaled it may not replace Iranian oil that’s disappearing from global markets as U.S. sanctions loom, but slumped off its highs of the day after Trump slammed OPEC for “ripping off the world”.
As Bloomberg noted, OPEC shrugged off the threat to Iranian supplies over the weekend, spurring some of the world’s most-sophisticated traders to forecast a return to $100-a-barrel oil. At such prices, crude demand “will be annihilated,” Petromatrix GmbH’s Olivier Jakob said.
“The market is assuming that OPEC will behave as they claimed they will at this meeting, but I don’t think that’s necessarily something that will be long-lived,” said Thomas Finlon, director of Energy Analytics Group in Wellington, Florida. A big reduction in Iranian exports “will cause the market to tighten up”.
Trump said OPEC is “ripping off the world”, in an address to the United Nations today.
API
A surprise crude build and Cushing stocks rose…
WTI (Nov) hovered at $72.30 into the API print (caught between OPEC and Trump comments) but knee-jerked lower (back below $72) on the surprise build in crude and gasoline inventories.
“Oil prices at $72.00 is quite an interesting level we haven’t seen in a long time,” said Phil Streible, senior commodity broker at RJ O’Brien & Associates LLC. “Brent and WTI have been some of the better performing commodities over the last week, so you’re definitely going to have fund managers jumping on board trying to ride that wave a little bit higher.”
The bulls are levering up too, as Bloomberg notes that the total number of options traded on Brent crude surged on Monday to about 274,000 contracts, the highest ever, data showed.
