On Monday, we introduced you to “Steve.”
Steve hates two things, as far as we can tell: Arab nations (“sand people” as he calls them) and monkfish.
We’re not entirely sure what monkfish ever did to Steve (maybe he’ll regale us with the story) but when it comes to the Saudis, it seems likely that the problem lies in Riyadh’s ability to move oil prices around.
See, Steve doesn’t think the Saudis have any influence on prices. Here’s some in-depth analysis he sent in yesterday:
Saudi Arabia is finished, its a country that’s as dead as deep fried monkfish. You can do all the wishthinking that you want, but you’ll be much happier dealing with the mathematical reality. The psychotic, saudi sand people are finished.
Well, as ignorant as that made old Steve sound, idiots have an uncanny ability to accidentally set themselves up to be made to look even stupider, which is exactly what happened bright and early on Tuesday morning when the Saudis informed OPEC that the kingdom raised output to over 10m b/d in February, reversing 1/3 of the cuts made in January. Oil promptly plunged.
Now that in and of itself shows just how much this market cares about the Saudis. Put simply: when they say something, oil listens. We got further proof of that when, apparently surprised at just how closely the market still listens to the kingdom, Riyadh pulled a “just kidding,” and tried to play the whole thing off. Here was the result:
As if that wasn’t enough “crude” excitement for one day, just moments ago, we got the latest API numbers which showed a surprise inventory draw. To wit:
- Crude inventories fell 531k bbl last week
- Cushing +2.06m
- Gasoline -3.88m
- Distillates -4.07m
So that’s notable because i) a U.S. crude draw would be first decline since December when compared with EIA data, and ii) the median forecast for tomorrow’s EIA print is a 3.13m bbl build. Naturally, crude spiked on this news:
So what are we to make of this whipsaw market action?
Well, we don’t know for sure. But fortunately, Steve stepped up to bat just in time. Here is his take (received about 45 minutes before the API print):
Who pays you to write your drivel?
Seriously, basic mathematics would tell you that Saudi Arabia isn’t just a sinking ship, it’s a vessel with a broken keel. Saudi Arabia is doomed, and 10 years from now it will be the American pipeline operators and drillers running the show in that psychotic sand box.