Time To See If Contrarian Theory Works In Oil

Posted: September 28, 2016 in Business, Farros, Oil, OPEC, Royal, Technology and Business
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OPEC just announced some “kinda” agreement about production levels and freeze.

Oil just skyrocketed on the potential “news” (up 5.3% @ $47.05 for the Nov ’16 contract).

Everyone has been waiting for this moment… a signal from OPEC that the strategy it’s employed the last few years is changing.

Everyone — 100% of all analysts — have come out saying this will put a floor under oil prices now.

The contrarian in me says when everyone thinks one way, the opposite usually happens.

What could possibly go wrong?

Maybe this inspires more U.S. shale oil to be produced… that was one of the reasons oil dropped from the triple digits not so long ago.

Maybe the “cuts” aren’t real cuts, just natural scale-back given the time of year (between summer driving and winter heating)… so any temporary euphoria in the market will soon get replaced with the commonsense observation that everyone is still pumping at near-record levels.

Maybe it’s just all of the OPEC members playing games with each other — and the world — again.

Who knows, but it will be interesting to see!

 

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