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Today we only have a flash blog, due to the Australia Day public holiday here in Australia, during which some historical event or other is celebrated through the consumption of BBQ’ed sausages and cold beer (yes please!).
Hopefully by the time we are dusting off our hangovers tomorrow, the oil price will have treated today like last Friday, not yesterday.
Oil prices gave back much of last Friday’s gains yesterday, slumping ~6% in both London and New York. Brent closed at US30.28 and WTI at US$30.15.
Like Friday’s sharp move upwards, yesterday’s rise was not driven by any particularly identifiable “numbers” or “events”. Rather commentators pointed towards the head of OPEC calling for non-OPEC members to collaborate on reducing production.
Such calls are hardly rare (although they completely ignore the fact that most non-OPEC production is conducted by a multitude of private companies rather than Governments who have an oil production dial in their office). The market is clearly flighty and directionless at present.
Ongoing inventory builds will likely send it down again – or evidence of less-than-expected Iranian production coming back on should do the opposite.
Quote(s) of the day
In recent blogs we have called into question whether the world really is “drowning in oil”. We don’t know the answer, but we do like to challenge consensus views. That brings us to the pitfalls of forecasting, as pointed out by famous baseball coach Yogi Berra:
“It’s tough to make predictions, especially about the future.”
And as Mark Twain said:
“History may not repeat itself but it does rhyme.”