Updates
Moments later: CNBC talking head says that traders are starting to question more openly whether Saudi can meet their pledge to cover any Iranian shortfall; Brent continues to outpace WTI; the gap continues to increase.
Original Post
Let's look at the recent chronology:
First, we all knew that Iranian oil exports would decrease under sanctions --> price up.
Second, Saudi said they could cover any Iranian shortfall --> price down.
Third, today, -- prices up. The "first" above was a given, almost a "fact." The "second" point -- well, there it is, we have differing opinions on the veracity of the Saudi reassurance.
Oil is now up about $1.50.
Goodness, are the "traders" speculating on the future price or are they "investing"? Figuring out whether a Saudi prince is leading you on about future plans/capabilities doesn't seem to me to be an easy thing to pin down with any sort of accuracy (or as you like to say repeatability) Kinda like speculation? Or a fools errand?
ReplyDeleteI've blogged many times on "speculators," a term I don't find useful. A better model for me is investors vs traders.
ReplyDeleteI would assume that both traders and investors are pushing the price of oil up a bit today. But investors had a great opportunity yesterday to accumulate more shares in oil companies at a discounted price.
It is interesting to see a bit of discussion on whether the Saudis can match the Iranian shortfall in the near term.