The key (recurring) catalyst for today's early spike in oil, was the latest desperate attempt by an imploding OPEC member, this time Nigeria to push oil higher when overnight its petroleum minister Emmanuel Kachikwu said that key members of OPEC intend to meet with other producers in Russia on March 20 to renew talks on an agreement to cap oil output, Nigeria’s petroleum minister said.
The headlines in question:
- NIGERIA OILMIN SAYS OPEC/NON OPEC TO MEET ON MARCH 20 IN RUSSIA
- NIGERIA OIL MIN SEES DRAMATIC PRICE MOVE AFTER OPEC/NON-OPEC
- NIGERIA OILMIN SAYS OPEC/NON OPEC TO MEET ON MARCH 20 IN RUSSIA
As Kachikwu hopefully added, "there will be a dramatic price movement” when the meeting takes place.
As a reminder, oil-exporter Nigeria recently saw its dollar reserves dry up, forcing it to beg for a massive loan from the World Bank as the current price of oil dooms this particular nation to a very painful economic collapse.
Sure enough, the algos bought this hook, lie and sinker and proceed to force another attempt at squeezing near record shorts.
The only problem is that moments ago, we got confirmation that not only are such desperate attempts to prompt "dramatic price movements", higher of course, laughable, they just suffered a spectacular loss of credibility when moments ago Reuters reported that no decision on the date or venue of a possible meeting between OPEC and non-OPEC producers has been made yet, a Gulf OPEC delegate said on Thursday.
"There has been no decision made regarding the meeting yet. No date or location decided yet. The Gulf countries prefer that it would be held in the first half of April, and preferably in Doha, or some other Gulf city," the delegate told Reuters.
"We are looking forward to having a good meeting and positive results."
Perhaps, but in the meantime you just outed one of the nations most impacted by the ongoing oil rout as nothing but a cheap liar, although in retrospect few would be surprised that the nation which unleashed on the world the infamous email scam is capable of stooping so low.
OPEC leader Saudi Arabia and non-OPEC member Russia, the world's two largest oil exporters, agreed last month to freeze output at January levels to prop up prices if other nations agreed to join the first global oil pact in 15 years. As we further noted, however, not only did Russian oil output rise to a record post-Soviet era high in February, Russian output is now at its absolute limit, which also explains why Russia was eager to "freeze" its production.
Finally, recall that according to Saudi Arabia the oil market remains oversupplied by some 3 million barrels of production daily; the same Saudi Arabia who energy minister Al-Naimi said two weeks ago in Houston that not only will the Saudis never reduce production, but are eagerly looking forward to the marginal oil producers to go out of business.
As such, our advice to the algos is to not follow ongoing lies by desperate OPEC ministers who will do and certainly say anything to get an even 1 cent pop in oil, but to keep an eye on the number of bankruptcies in the shale space. Considering that many shale companies just sold a record amount YTD of new equity, the default wave was just postponed by at least several month, something which - if anything - may prompt Saudi Arabia to pump even more.