I guess there are a few things you can say about OPEC meetings; (1) they can be way more fun than G20 or G7 summits, and (2) they almost always end in acrimony, which is part of why they’re fun in the first place!
The recent Doha oil freeze summit, however, is a slightly more complicated animal, not only did it involve most of OPEC’s dysfunctional member countries; it also included several other antagonists as well, making this CNBC story not much of a surprise:
A summit in Doha between the world’s largest oil producing countries ended without an agreement on Sunday, as country leaders failed to strike a deal to freeze output and boost sagging crude prices.
The conference’s failure sent crude prices tumbling in early trading on the NYMEX, which fell by more than 6% as traders resumed the commodity’s sell-off. Stock futures also fell in sympathy, indicating a lower open on Wall Street on Monday.
What’s surprising here actually is the fact that speculators were wholeheartedly betting on the group committing to some historic pact. Being an oil bull prior to the event more or less equated to believing (a) that Saudi Arabia could strong arm Russia and Iran into accepting its terms, (b) that Iran would scrap its pledge to regain its pre-U.S. sanctions market share, and (c) that a volatile, rancorous group – with one member there merely as an observer – could actually accomplish something.
Tom Kloza, global head of energy analysis at the Oil Price Information Service, was even less emphatic when he spoke to MarketWatch, calling the recent gains a “triumph of hope over reason among traders.”
In any case, Brent and WTI crude futures have so far trimmed Monday’s losses to 4.34% and 4.22%, respectively. With margin however that still means a nasty spanking for just one day.
Photo: Paul Lowry