Oil Volatility Spikes Ahead Of Key Saudi Speech In Houston

Saudi Arabia’s oil minister Ali Al-Naimi is due to speak at about 8:50am Houston time at the CERA oil market conference and oil prices are swinging around (now back below $33 - front-month - and in the red for the day) as the almost unprecedented moves intraday in black gold spike volatiltiy to near record highs. In order to help the algos figure out just what to do when Al-Naimi speaks, we breakdown his words (and the latter deeds) over the last few years with expectations that he will confirm his opposition to a crude production cut "at this time."

 

The intraday swings are almost unprecedented...

 

Smashing vol near record highs...

 

But as Saxobank notes,

“It is going to be interesting to see what he says as he steps into the lion’s den”

 

“The market is probably looking for some soothing comments from Naimi considering they have been talking about a production freeze and supporting prices at these levels -- we could see some short-covering ahead of that”

Al-Naimi is likely to reaffirm discussions over a production freeze made with Russia, Qatar and Venezuela last week, explaining that a statement regarding the freeze is a first step, and Saudi Arabia will keep working to stabilize market - this would likely be seen as bullish (by the machines).

Here’s a primer on what he’s said publicly in the past and, where applicable, what happened next in terms of oil production policies of Saudi Arabia and/or OPEC:

Feb. 2016 output freeze deal “beginning of a process” that could be followed by “other steps” to stabilize, improve the market, he says in Doha

 

Dec. 2015: “We will listen and then decide” before meeting that saw output target abandoned

 

June 2015: Naimi is “100% satisfied,” accord. to Hayat

 

Nov. 2014: Oil mkt will “stabilize itself,” OPEC will take “unified position,” Naimi said before gathering that left target unch.

 

Dec. 2011: There is going to be a “great agreement” Naimi said. Ceiling was raised to 30m b/d, individual quotas abandoned, reflecting Saudi position

 

June 2011: Naimi declined to answer reporters’ questions before meeting at which other members blocked Saudi proposal to raise output

 

Dec. 2008: “There will be a cut in production of ~2m bbl,” Naimi told reporters before group reduced output target by 2.463m b/d

 

Oct. 2008: “Who said anything about a cut?,” Naimi said before OPEC meeting. “Prices will be determined by the market.” Group’s ceiling was subsequently cut by 1.5m b/d

 

Sept. 2007: Al-Naimi made no comment to reporters before meeting where Saudi proposal to raise output was opposed by other members. At the meeting itself, country proposed increasing the quota, a position that prevailed

 

Dec. 2006: “We need to do a little more work,” Naimi said before OPEC agreed 2nd output cut in 2 months.

 

Oct. 2006: “We are trying to bring back the market to its normal equilibrium and the price will take care of itself,” Naimi said on arrival at hotel for OPEC meeting

Trade accordingly.