A Saudi Summer Surprise

A little Saudi Surprise or was it just another excuse to buy back into the oil bull market? Monday turned into a big buy back session as the oil came storming back. Traders who dumped positions on Friday seemed to think the market all of a sudden had value on Monday. Yet if you talked to two or three different traders as to their reasoning’s to get back long the market, it was hard to find one defining reason.

Without much in the way of news the crude oil rally was larger enough get back a big chunk of what they gave back on Friday. Some traders thought that the rally came about because Saudi Aramco the state run oil company announced that it will cut crude oil exports to Asian refiners for the ninth straight month. Of course that shouldn


Some pointed to refinery problems, most notably at a Texas City refinery, that reported a slowdown in runs. Yet in the end it was most likely because traders are looking for any excuse to buy. And if you look at the latest report from the International Energy Agency you can probably see why.

Once again the IEA admitted that they had underestimated world oil demand and upped its forecast. This time the IEA says that world oil demand will grow to 1.7 million barrels a day which was up about 200,000 barrels a day from its previous forecast. The IEA cites higher than expected production in Nigeria, Indonesia, Yugoslavia, Venezuela and Singapore. They might also want to point out that the US economy seems to be bouncing back a bit stronger than expected and that should foreshadow increasing demand.

FX Street