Organization of Petroleum-Exporting Countries

With oil prices spiking nearly 10% from last Friday's sudden, capitulation "flash crash" which was perhaps driven by Pierre Andurand liquidating his entire long book, there has been a scramble by analysts to "fit" the narrative to the price action and the sudden change in momentum, most notably by Goldman, which continues to pump one after another bullish crude note, we suppose because Goldman's prop trading desk still has some oil left to sell to clients.

When it comes to the oil market, the narrative over the past year, ever since OPEC's first aborted meeting last April, has been just one: limit crude supply in hopes of rebelancing the oil market, reducing excess inventories, in the process sending the price of oil higher. However, echoing what we have warned for many months, overnight the world’s biggest independent oil trader said OPEC's efforts could be in vain because the oil producing cartel is seeking to control the wrong thing: it's not a matter of supply, but global demand which is simply not there.

Undeterred by earlier failure to jawbone the price of oil higher, moments ago a new barrage of headlines hit courtesy of Reuters reiterating more of the same, and adding a new spin, namely that this time around the oil considered oil production cut extension will be nine not six months, thus lasting at least through March 2018.

With all eyes on crude, following last night's mini flash crash which sent WTI lower by 3% from just above $45 to under $43 in under 10 minutes, equity markets, generally quiet overnight, have taken on a secondary importance ahead of today's key risk event, the April payrolls report (full preview here). In global equities, Asian and European stocks are lower, while S&P futures are little changed.

Two months we first suggested that OPEC may be fabricating data about its production cuts - and certainly overstating the "success" of its Vienna production cut deal - by looking at the rising Chinese oil imports, and by extension, rising oil deliveries by OPEC nations.