Why WTI Surged Today -- June 22, 2018

Earlier this afternoon, I noted that WTI was up  $3.00 today on an announcement that OPEC/non-OPEC would be increasing production by about a million bbls/day. The "OPEC basket," interestingly, dropped $1.54/bbl.

Screenshot at that time:

Then, after I get home from running some errands, I see that oil closed at an even higher level. Screen shot now:

[Note: I'm not going to change the typo in the screen shot above; it should read "3:11 p.m. CDT.]

There are many, many reasons for the price of oil to be trending higher right now, but having said that, about the only thing I know that is different between 8:00 a.m. this morning and 4:00 p.m. this afternoon is the OPEC/non-OPEC announcement.

I've always said predicting the price of oil is a fool's errand. and that was certainly true today. We all knew that the price of oil was going to go up with the OPEC announcement -- it had been telegraphed all week -- but, hey, give me a break, does it make sense that the price of oil will go up when Saudi Arabia says it plans to produce more oil? LOL. Again, remember, other than that announcement, as far as I know, nothing else changed. And, on top of that, "everyone knew" that they were going to raise prices.

The "OPEC basket" held steady at the close but lost over 2% for the day, about $1.54/bbl. Prince Salman needs $80-oil to launch his Saudi Aramco IPO. Several years ago he had hoped for $100-oil.

Half the world, including Goldman Sachs (upstairs), says "lower for longer."

Meanwhile, the other half of the world, including Goldman Sachs (downstairs), there is going to be another bull run in the price of oil.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what I might write, what you might read, or what you think you might have read.

Having said that, I'm quite happy with my investment strategy.

Note: I have not watched any business news, news in general, or talk shows on television since one week ago Friday. My plan is to wait at least one more week with no television (except sports, comedies, and an occasional movie) which brings us to 4th of July week and I definitely won't be watching any television during that week. So, another two weeks. I have no idea what the talking heads are saying: only what I read on a few select sites on the internet and what readers send me.

On June 13, 2018, I posted another installment of sixteen reasons why the price of oil will be going up. I made a huge error, of sorts, at that post.

This could all be greatly affected if Russia and Saudi Arabia agree to increase production. We will know more by the end of June / July. "Those" tea leaves suggest Russia and OPEC will raise production using the excuse that loss of production in Iraq, Iran, Venezuela and global demand forecasts for 2019 necessitates such action.

Technically I was correct, but in fact, I expected the price of WTI to fall -- short term -- if OPEC/non-OPEC announced an increase in production. On that I was wrong.

One last thought: if someone asked me why WTI shot up as much as it did today, this is my answer:

Go back to the sixteen reasons -- and play the song while you are at. None of the sixteen reasons have changed. This is what is new, what happened today. Saudi Arabia said it will increase production, but Saudi is afraid of overshooting the target again (like they did, 2014 - 2016) and so, in their timidity, raised production so slightly in the big scheme of things, traders/speculators are pretty confident that the oil sector is behind the "eight ball" when it comes to production. Which is very bullish for oil.

Why did the "OPEC basket" fall today? I think it has to do with the strength of the dollar.