Crude Oil’s Wild Day
In spite of today’s major public holiday in the U.S.A. – Labor Day – even before New York’s putative opening bell would have rung, crude oil prices have already see-sawed by 5.56% since Tokyo opened the week’s business some hours ago!
The price of WTI Crude Oil opened just a whisker above $44 per barrel, before peaking at around 9am London time at a high of approximately $46.50 per barrel. Since London came online, the price has been falling off steadily albeit not with as much momentum as the initial rise. As at the time of writing, the price has been falling continuously for almost four hours, from the high of $46.50 to a low of $44.84 per barrel: a decrease of 3.57%.
Even by Crude Oil’s usual high volatility, these were very large moves. The initial jump was caused by news that Saudi Arabian and Russian representatives were discussing a range of potential measures to stabilize markets, including even the possibility of an output freeze. However once the public briefing by the Saudi Energy Minister Khalid Al-Falih actually began, the price began to decline sharply as markets realised there was no imminent output freeze. It was a classic case of “buy the rumour, sell the fact.”
Although the Russian leader Vladimir Putin stated last Thursday that he wants to see Russia and OPEC agree a freeze on oil outputs, but it would seem that detailed proposals towards that end are yet to be seriously discussed by the parties, whose discussions at the G20 meetings are apparently focused on security matters, presumably mostly Syrian issues.