This is yet another installment on the latest oil price movements.
The Doha pow-wow turned into a non-event as Saudi Arabia at the last moment pulled the plug on any potential deal, stating that in order for there to be a deal, Iran must be included.
The Doha failure surprised me because I thought there was no downside and only upside. All represented countries were at or near maximum capacity, so landing on a deal would not have made any significant difference to their production levels. Yet, if a deal had been struck, that action might have added more confidence to an oil rebound.
Even more surprising to me was the oil price reaction after the Doha failure. Oil has been remarkably strong during the past two weeks. John Kemp at Reuters suggests in his article “Oil rally is not just about hedge funds” that oil prices are becoming dangerously overheated. We will discover soon whether recent prices are warranted.
At this point, I am skeptical of oil rising much further or falling back close to prior lows in the near term.