The Latest Media Attempts To Suppress Oil Prices
It started with the Iranian supply overhang and has grown louder by the day in the media. While we were all supposed to be cowering in fear at the 1MB/D that would be coming from Iran any day, it emerged instead that not only is the deal in doubt, as the only real agreement was to agree to say there was an agreement, but any such additional supply won’t occur imminently. Far from it.
That sanctions will only be lifted through intensive verification is now the reality and this process will take time. And even that isn’t fully agreed upon as we now learn. Be that as it may, we wake up yet again with more evidence that the Cushing cries have all but died and now shifted to the forward curve which has flattened. This is the normal course after a price collapse as the market begins to gain confidence that it will rebalance soon.
Hedging by producers is now also playing a role as the financially strapped ones are pressuring prices to lock in whatever little profit they have, ahead of the October credit redetermination, in order to preserve liquidity. A further source of pressure is articles now seeping out at an increasing rate in the media regarding OPEC increasing production (which only appears as a response to much higher than anticipated demand, disproving what the same media asserted months ago). OPEC’s strategy will most likely be short-lived but now, if one can believe it, we’re supposed to buy the latest “worrying news” of rig counts increasing?
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