One week after the ‘magic’ oil supply deal was extended between OPEC members and Russian and what do you get?
Just about the most pessimistic response I’ve ever seen to bullish news.
Now, I’m a trader. One of the oldest trader axioms in the book is “Buy the rumor, sell the news”.
This drop in oil prices, and the even more vicious drop in oil stocks may come as a surprise to many after this deal, but not really very much to me.
But quite frankly, the pessimism that has been surrounding the oil markets since the announcement in Vienna is startling.
I suppose it’s an easy position to take; after all, if a combined OPEC/Russian deal to limit production through the Spring of 2018 can’t make prices go higher, what are we to believe?
Why, the quaking in the analyst’s boots is almost palpable – Read here – who’s going to stop those crazy frackers?
And – oh my God – couldn’t OPEC have done just a bit MORE?
Another view from a sidelines know-it-all: You know, the Saudis are just dumb – they really have to rethink their long-term strategy if they’re going to get the hang of this oil market thing…………..
And then the big boys chime in: Both Goldman Sachs and Morgan Stanley have seen the Saudi plan, measured it against the suicidal pace of US fracking and deepwater drilling advances, and decided that oil is going to have a secondary swoon in 2018.
Just how bad is it going to get? You got it – I got some guys saying it’s totally over: Oil is done forever.
Thirty years I’ve been following oil. Thirty years. Every time oil goes up, the world figures out how it’ll never come down. When it’s down, those same voices very carefully analyze why it’ll never go up again.
Don’t these guys get tired?
I could go through a long explanation of the marginal pricing of oil barrels – or an analysis of the financial markets and their cycles as they wield their enormous influences on the pricing of oil and other commodities.
Or, I could regale you with the indicators of the other side – convincing me that this is hardly a ‘new normal’ – that the markets are experiencing new factors of efficiency and overwrought investment pressures that need to be understood, for sure.
But after all of it, I believe that nothing can stop the global oil price cycle that has been in play, in one form or another, since the 1950’s.
If you want to be regaled, however, in all the GOOD signals that still have me engaged in oil stocks for the long haul, you’ll have to join me in this week’s webinar – ON TUESDAY June 6th at 4PM – and NOT ON JUNE 5th – as originally planned.
Get your reservation here!