Over the weekend there was an OPEC High Level Committee meeting between OPEC and non-OPEC members regarding the production-cut terms. However, nothing concrete actually came from this meeting at all. It seems as if Iraq and Iran are not the only ones who feel they should be exempt from either a freeze or a cut. Several others, including Russia, do not want to participate in a production cut, and even a freeze looks unlikely. The majority of non-OPEC members in attendance held their ground and feel that OPEC should handle this situation on their own before involving non-OPEC members. This failed commitment to a deal is quite unsettling for future oil prices and the global supply glut. More positive news could come out of a haunted house than this past weekend’s botched meeting.
In fact, positive news is the last thing on anyone’s minds. In response to the “non-outcome” of this weekend’s meeting, money managers and investors have raised their bearish flags, as if they have just seen the Grim Reaper himself, by cutting their net long crude future positions. On Friday I mentioned how stable oil prices have been, fluctuating just a dollar or two, above or below, $50/bbl, but as you can see, the market is moving significantly further down this morning. Crude is currently down $1.56 to $47.14, RBOB is down $0.0311, and ULSD is down $0.0487.
Adding more poison to the potion, it seems as if there were a few less pumpkins in the pumpkin patch last week. According to last Friday’s Baker Hughes rig count report, the 17 week streak is over. Two oil rigs here in the U.S. went offline, bringing the total rig count to 441. Could this be a sign that prices may move even lower?
While we sit here and eat this year’s Halloween hauls, keep your eye on the following events and news stories that could have an impact on the oil and gas markets:
- General Electric has announced that it will merge its oil and gas business with Baker Hughes. The new unit would be controlled by GE.
- This Friday’s job report is the last one under President Obama’s administration.
- Next Tuesday, November 8th, is Election Day. Make your vote count.
- The Federal Reserve will be holding a policy meeting on Tuesday and Wednesday.