OPEC’s Crude Oil price manipulation

The message is clear in OPEC’s Crude Oil price manipulation

You can click the image to read the article at CNBC.

opec's crude oil price manipulation

There is a reason that Energy is a wild card among the inflation trades, and this is it. OPEC’s crude oil price manipulation is clearly an act of gamesmanship and maybe even desperation. Oil is a market that has been trending down very steadily since June, 2022. Today, the associated ETF is getting a ram job right up to the underside of the downtrending daily SMA 200.

opec's crude oil price manipulation is driving the crude oil ETF (USO) up by 6% today

Meanwhile, various fundamental eggheads are weighing in on the matter, such as this lady who seems to be ignoring the downtrend from last June and hyper obsessing on the banking crisis as the reason poor oil had been bearish before today’s manip.

“What happened to the oil prices over the last three weeks was nothing to do with oil factors, it was everything to do with the banking crisis, and the fears that brings with it. We also had a huge, huge increase in [the] short market, and that is something that OPEC are very keen to stomp out,” Amrita Sen, co-founder and director of research at Energy Aspects, told CNBC’s Dan Murphy.

No ma’am, it had been bearish for its own macro fundamentals and supply/demand. Now OPEC simply cut the supply and presto, more demand per supply. It’s like magic.

“The anticipated increase in oil prices for the rest of the year as a result of these voluntary cuts could fuel global inflation, prompting a more hawkish stance on interest rate hikes from central banks across the world. That would, however, lower economic growth and reduce oil demand expansion,” said Victor Ponsford of Rystad Energy in a research note.

In short, OPEC is ramming it up the shorts’ ass. But sorry, Victor. It will not fuel inflation. It will fuel rising oil prices and if it lasts long enough, prices of knock-on services for however long the manipulative effects last (day, week, month/s…?). But this has little to do with inflation, which is rolling over on a YoY basis as money supply does so in guidance.* It’s OPEC giving the finger to the West, but it is not macro-economic. It is political.

* Just as money supplies guided us into the inflation problem, they will and have been guiding us out of it as well, assuming the Fed holds off on new printing. Indeed, if this shock is strong enough it could exacerbate the jerk away from inflation toward what’s next.

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This Post Has 4 Comments

  1. Dagny

    Fossil fuels bull here. Don’t laugh, Gary. Industrial society requires these. And nuclear. Current alts wind, sun, etc. can and do contribute but they are not dispatchable i.e. can’t be turned on to meet demand. Lack of investment in development (drilling) to offset depletion will, in the next few years, affect supply. And many equities in this industry pay dividends. Will it be a rough, choppy ride. Yes.

    1. Gary

      Agree Dagny. My view is of a coming chop, not a long-term funda. No laughing by me!

  2. Mo

    Hi Gary,
    I’m wondering if you might provide your expert opinion on a couple of stocks that are peripherally related. What do you think of DHT and FRO? I’m was up around 50% on both (until this morning) and now wondering if this is buying opportunity or whether to hold/sell. What do the charts say?
    Thanks for your help!

    1. Gary

      Hi Mo, DHT still a firm daily chart uptrend, dropping to fill a gap that would come close to testing the uptrending SMA 200. Were I wanting to buy it I’d be looking there. While anything is possible, the chart certainly not at all broken. FRO is similar. Both probably have S/T downside potential but both have major daily uptrends intact at their 200 day averages (DHT: 8.47 & FRO: 12.72).

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