Why oil prices fell after the OPEC + meeting

After forty years or so of living in the financial markets in one way or another, I haven’t often rested my head these days. I might not be okay with every move, but I can usually see the logic behind them. The big drop in oil prices this week, on the other hand, mystifies me. I can, I guess, see it was like “buy the rumor, sell the fact”, but the timing of the move and its utter disregard of news that positively impacts fundamentals was a bit confusing.

After two months of seeing crude jump about twenty percent, a pullback was happening at some point, almost no matter what. This is why I wrote here three weeks ago that I was starting to reduce some positions in oil stocks, not because I expected a collapse or whatever, but simply because it was. time to take profit, knowing I could buy back if oil pulled out for technical rather than fundamental reasons.

When this setback started as the OPEC + meeting approached, I started to get a little nervous. Did the market know something I didn’t know? Was there massive backstage pressure from Biden and European leaders who were suffering politically from rising energy costs? Were we going to see a further easing of production restrictions?

The answers were no, no and no, but that didn’t seem to matter.

We have the feeling that, far from feeling pressure because of Biden’s discomfort, Johnson et al, the main drivers …

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Felix J. Dixon

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