One of the world’s largest oil producers, Saudi Arabia has just made a turn-around in its raw materials mining policy. Within six weeks, S. Arabia withdrew from advocating for higher oil prices by attempting several times to stop the rally in the raw but unsuccessful.
What has changed over the past 24 hours? Supply threats stemming from the re-imposition of US sanctions on Iran and the collapse of the energy industry in Venezuela have led the Arabs to take cardinal measures and show that they are still a factor in the market. Although unofficially, oil speculators believe Donald Trump is also part of Saudi Arabia’s decision. On April 20, the US president said he was worried about rising oil prices, blaming OPEC for being at the bottom of everything by exporting a large amount of oil to tankers in the ocean, waiting for the price to jump. On Friday, Saudi oil minister Khalid al-Falih responded, saying his country shared the “worry” of its customers. Minutes then announced the change in the country’s mining policy.
What can we expect from now on? If we judge entirely on Price Action-a, we will not soon see a new High. It seems that the $ 73 per barrel will be key to WTI. The real market is still confused and the traders play safe because it is not clear what the OPEC countries will be. As Saudi Arabia was the leader who gave the strongest support to the abstraction agreement, such a policy change would most likely give impetus to smaller oil producers to increase yields. I believe that this will drive the price of black gold next week, as most of these countries are facing tremendous financial difficulties. I also add to the bearish prospects the large stockpiling of stocks in the US and the fact that the speculative net positions are at zero level, indicating that they do not expect any further rally.
Source: Bloomberg Pro Terminal
Trader Petar Milanov