Oil

The oil data seems, to me, to suggest a much lower price, rather than the repeatedly bullish threads I tend to read.

The macro set up, analogous to prior tightening cycles (dotted line of the 2014 episode) heralded a great fall (the other dashed line reflects the GFC, which was more about the housing market shock reverberating across the globe).

Clearly, at present, there are negative supply side shocks, which make 2014 imperfect by way of comparison.

Still, history often rhymes if not outright repeats, which is why the OPEC comments on production are of such interest, today.

The rumour was that the Saudi oil representatives were giving the green light to an increase in production, unwinding some of last month’s cut.

The Saudi’s seem to be denying this rumour, but it weighed against oil quite heavily overnight (-5%) until this mornings’ denial.

Wild wild west type stuff.

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