CL Getting ready for fireworks-
US shale production at all time record and the rig count just keeps on climbing.
Saudis cutting exports to the US dramatically to multi decade lows, as in from around 1.2 million a day to 850,000 a day.
http://www.wsj.com/articles/saudi-arabi ... 1497346203
Cushing showing decent draws for the last two weeks according to Genscape.
BUT
OPEC members exempt from the Vienna agreement have increased production to the point that overall production is back to where it was.
Summer driving season refinery production ends sometime in July so time is very short if they are going to get a meaningful reductions in stockpiles.
Hedge Funds have to continue to believe in the OPEC cuts. Since December we have seen what happens when they get cold feet. They just were reminded what happens when someone tries to check out of a five star hedge fund hotel so I would think they are going to react fast to bad news in CL.
Carmageddon is continuing to develop and as subprime loans go bad and consumer credit stops increasing all those newly hired wait staff folks won't be joyriding in their new to them fancy cars. Just to make it worse Detroit is extracting the last of the potential buyers for the new, super efficient pick-up trucks with incentive packages we haven't seen since you know when.
Finally, when will the Dragon stop drinking? Because when they say we have enough in our SPR perhaps a million barrels a day will hit the market.
My opinion is it looks like the Saudis are all in on a desperate bluff. They have yet to actually reduce production beyond seasonal swings and were counting on the gullibility of the hedge funds to do all the work. Well the pigeons have started to figure out it is a scam so the players are being forced to put some of their own skin into the game. I don't think it will work, they completely underestimated US shale and were too desperate to announce a deal by what ever dead line Goldman told them they had to meet (seasonal trends) so too many members were exempted. So yes the con game will become clear as we get July inventory reports unless we read about empty tankers piling up in the Arabian Gulf and off Singapore right now. Watch for headlines about new lows in tanker rental rates and negative guidance from conference calls.