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Crude oil is going parabolic
Crude oil is going parabolic.
In just a few minutes on Monday morning, the price of oil went from down 3% on the day to up more than 7%, with West Texas Intermediate crude rising above $48.40 a barrel for the first time in a month.
This rally follows a two-day surge to end last week that saw WTI prices rise nearly 20%. According to the folks at Bespoke Investment Group, this is the biggest three-day rally for crude since January 2009.
Last Friday, Dave Lutz at JonesTrading noted that people simply were betting heavily against oil, and those shorts were getting squeezed out at the end of last week. Some of this may still be getting shaken out on Monday, the final trading day of August.
(FinViz)
Monday's move in crude also follows a report from Reuters that said OPEC, the 12-member oil cartel led by Saudi Arabia, "stands ready to talk to all other producers," according to a bulletin from OPEC.
The bulletin added that these talks would have to be on a "level playing field" and that OPEC would protect its own interest.
This news follows a report last week indicating that Venezuela had been urging other OPEC members to convene an emergency meeting to address the cartel's production targets, which have been overshot all year in the face of a collapse in oil prices.
Venezuela had been seeking to have these talks coordinated with Russia, a non-OPEC member but a state that derives much of its governmental revenues from the sale of oil.
Of course, Saudi Arabia is seen as the leader of OPEC, and any concessions or even discussions regarding production targets still run through the Saudis.
But with oil prices taking a new leg lower earlier this month, there is a growing sense that OPEC will blink; or perhaps it already has.
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