OPEC Rumor-Mill Utterly Fails - Oil Tumbles On Production-Cut Deal Extension Chatter

Tyler Durden's picture

Just as Reuters' John Kemp warned, it seems the hedge funds have abandoned OPEC. In the good ol' days (of the last year), one mention of production cut deal extensions, or high production cut compliance rates, would have been enough to see levered buying with both hands and feet, self-reinforcing the 'success' of OPEC's plan. Today - that failed!

WTI plunges below $50 and we tweet that OPEC is due any time now...

Sure enough seconds later the folowing headline drop...

  • *OPEC COMMITTEE SAID TO SEE MARCH CUTS COMPLIANCE AT ABOUT 98%
  • *OPEC TECH COMMITTEE SAID TO SEE NEED FOR 6-MO CUTS EXTENSION

But the reaction was a disaster...

As we noted previously, reported stocks need to start falling soon if hedge fund managers’ confidence in rebalancing is to be maintained.

Which is why the daily jawboning by OPEC in the form of its recurring messaging about high levels of compliance has lost much of its effectiveness and is no longer enough to justify a bullish position in crude.

As a result, reported stock changes now matter more for oil prices and calendar spreads than compliance assessments by OPEC’s secondary sources.

Kemp's conclusion: "OPEC’s credibility is on the line: stocks need to show a significant draw during the second and third quarters or many hedge funds are likely to give up on the bullish narrative prevailing since late 2016."

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
1stepcloser's picture

meanwhile gas stations are offering Vaseline with each 93 Octane fill up 

scoutshonor's picture

meanwhile gas stations are offering Vaseline with each 93 Octane fill up ~~~~~~

Is that one of those additives that make things run smoother?

Government needs you to pay taxes's picture

Whaddaya expect, Golden Sack's prop desk to LOSE money keeping oil above $50 for the ARAMCO IPO? 

Raffie's picture

Oil is tumbling pretty good.

To bad the gas prices will stack jacked up.

cheech_wizard's picture

It's past noon on the East Coast, where is my fucking doom porn?

 

debtor of last resort's picture

Diminishing returns strikes again.

coast1's picture

 robbed a bank last month...I had it all planned out but somebody recognized me, grrrr...So, the police came to my house, and politely asked me when I could show up for court...I gave them a date about 3 weeks out....Now keep in mind, I got 10k from the bank and was living high...anyway, I go into court, and the judge fines me 1k.  I am thinking about robbing another bank, this is cool :-)

silverer's picture

Every time I read this crap I want to ride my bicycle.

PhiBetaZappa's picture

Price manipulation has never been effected by a rumor mill failure before.

This is totally unacceptable.

cashtoash's picture

Oil is not even at $40, what is the big deal.  Traders eat 5% fluctuation just over lunch hour

yngso's picture

This isn't rocket science. High price = more NOPEC oil. More glut crashes price, so why give away market share?