Organization of Petroleum-Exporting Countries

On the heels of last night's big crude build, OPEC's overnight report stating that supply cuts won’t re-balance the market until the second half of 2017 has sparked further losses in oil prices, almost erasing the entire OPEC/NOPEC/Saudi cut ramp.

As Bloomberg reports, OPEC said its agreement to cut production, while speeding up the re-balancing of the global oil market, won’t result in demand exceeding supply until the second half of next year.

Just hours before the November 30 Vienna OPEC meeting, whose outcome sent the price of oil soaring, Gartman had a recommendation: "we are short of crude oil from yesterday; we’ll have stops on those positions on a closing basis this afternoon here in the States, with the intention of adding to those short positions once the OPEC meeting is behind us."

With oil prices surging to 17-month highs following this weekend's OPEC-NOPEC deal and Saudi promises to cut still more, many Wall Street analysts are skpetical with Goldman Sachs warning that the Saudis are wrong to think U.S. shale production won’t respond to higher prices. However, Nomura and Bernstein see little threat to OPEC from rising U.S. shale production in 2017.

Prices spiked...

Despite Saudi Arabia pumping record amounts of crude, the energy complex has spiked 6% higher tonight after two major headlines. First, Russia and other non-OPEC nations agreed to join the OPEC pledge to reduce production; and then, in what some are calling their "whatever it takes" moment, Saudi Arabia surprised the market by saying it will cut more than previously agreed.

Saudi Arabia will “cut substantially” below the target agreed last month with OPEC members, Energy Minister Khalid Al-Falih says.

 

Non-OPEC oil-producing nations struck a deal in Vienna on Saturday to cut crude output by 600,000 barrels a day, joining a pact meant to reduce a global oversupply of crude, lift prices and lend support to economies hurt by a two-year market slump.

The pact, the first between the two sides in 15 years, comes two weeks after OPEC agreed to reduce its own production by 1.2 million barrels a day.