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Oil Prices Continue To Rise On Hollow Saudi Comments

zerohedge.com / by Irina Slav via OilPrice.com / Aug 19, 2016 9:45 AM

Last week Saudi Arabia’s Oil Minister said that the large number of short positions on crude have caused prices to fall, even though the market is already rebalancing itself.

This statement immediately led to frantic covering, which pushed prices higher.

This is just the latest confirmation that Saudi Arabia has taken center stage when it comes to oil. Nobody cares anymore about fundamentals, everyone listens to what Riyadh says. If Riyadh is bullish on oil, then oil prices rise, despite any production data that might contradict their words. If Riyadh decides for some reason to be bearish, the market follows.

The extent of this dependency of traders on every word that comes out of Khalid al-Falih’s mouth (and other Saudi officials) becomes all the more evident in light of the latest production forecasts for Saudi Arabia. August production is expected to hit a new high of 10.8-10.9 million bpd, up from 10.67 million bpd in July. Why? Likely so Riyadh has more leverage at the upcoming unofficial OPEC meeting in Algeria. Not that it needs it, now that it is the undisputable tone-setter of the organization.

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