Saudi Energy Minister Warns Speculators Against Betting on Oil
September 18, 2020
Two stories are impacting crude currently. The OPEC+ group meet yesterday, and the news was that there would be a hard crack down on those not in compliance. They also said they may have another meeting in October to address the current market, which was a surprise. But then Saudi Energy Minister Abdulaziz bin Salman made some very strong comments that gave the market legs to trade higher. The Prince warned speculators from betting against oil prices, saying “We will never leave this market unattended. I want the guys in the trading floors to be as jumpy as possible. I’m going to make sure whoever gambles on this market will be ouching like hell.” All of that news is supportive and should lead to volatility moving forward regardless of where prices go. Then early today the market get the news that Libyan commander Khalifa Hafter said his forces have decided to resume oil production after they had imposed a blockade since January. Libyan production has its challenges but could be near 1.0 million bpd in a few month if all goes well. This additional production would need to be addressed by OPEC+ if it gets those levels. This news has caused crude oil price to back off their highs.
The fact that OPEC said they would meet again in October was a surprise to the market and has given the impression that some more drastic action might be taken, like another production cut. This is a shift in market sentiment and traders will be watching for any development on this front moving forward.
Now OPEC and especially Saudi Arabia, which is the leader and largest producer in OPEC, has been known to talk up the market. Are these comment an attempt support price as all OPEC members need prices at least supported in this area but would prefer higher prices or is this the real deal and Saudi Arabia will work to keep production down and get the market back into balance.
The market has traded higher and lower today and currently sit right in the middle of its range so far today. Traders are likely to sit tight and stay on top of the news and we head into the weekend. The big move for today are already be in place unless there is more news on the OPEC front or otherwise.