Lurching From One Mistake To Another -- March 14, 2017

Updates

March 15, 2017: wow, see this post.  

Original Post 

First it was the trillion-dollar mistake back in October, 2014, when Saudi Arabia announced a surge in production, or at least taking off all constraints/restrains on OPEC production. Two years later we know how that turned out.

Now, from Bloomberg: Saudi Arabia took on most of the cuts; no one else seemed to play ball, and now the headline: OPEC's best signal of success no longer looks so promising.

When OPEC announced production cuts last year, the most reliable indicator of oil-market supply started signaling a shortage ahead. Now it’s pointing the other way.
In the weeks after OPEC’s Nov. 30 agreement, shorter-term oil prices began to strengthen versus longer-term contracts amid expectations the group’s output cuts would cause a shortfall this year. That trend is reversing on growing concern the curbs aren’t enough to clear the surplus in world oil inventories.

Oil prices have slumped below $50 a barrel for the first time this year as record crude stockpiles and rebounding production in the U.S. suggest that the curbs by the Organization of Petroleum Exporting Countries and Russia aren’t working fast enough.

This article is where the "backwardation/contango" graph that was posted earlier was first published. Tracy Alloway, via Twitter: "Oops? Oil market technicals (term structure, spreads) all suggest OPEC agreement is hitting Saudi Arabia the hardest.