Moreover, at higher oil prices, some OPEC producers could be tempted to cheat (even more) and the surprisingly high overall compliance, of which the cartel is so proud, could quickly fall apart.
There are also expectations in the market that OPEC's next meeting on Nov. 30 will agree to extend cuts beyond the current expiry date in March 2018.
"The political situation in Saudi Arabia remains sufficiently volatile to spike crude values by at least 50 cents at any given time as was the case (Thursday)", Jim Ritterbusch, president of Chicago-based energy advisory firm Ritterbusch & Associates, said in a report, noting he did not expect Friday's oil rig count to exert much price impact. "Even if it rises temporarily above $70 perbarrel, it is unlikely to be sustained for a long period of time as the higher the price will increase the production of US shale oil, which will effectively put a cap on oil prices", Mu said.
The Saudi Crown Prince, Mohammad Bin Salman, coordinated the arrest of a number of princes and ministers, on corruption charges. However, I believe that once the details of the tax plan are agreed upon, and its passing is a foregone conclusion, the equity rally will be over in the short- to medium-term. This is the source of market risk. "Yet they have also played their part in hastening the rebalancing process", he noted. "We think the move reflects the start of a widespread re-evaluation", he said, as quoted by Bloomberg. There's no doubt that OPEC and co. have been a major influencer of the most recent rally, but oil traders have a new political risk to consider, in the coming days and weeks.
Oil prices eased on Tuesday, after both U.S. crude and Brent posted solid gains in the previous session.
China's October oil imports fell to just 7.3 million bpd from a near record-high of about 9 million bpd in September, according to data from the General Administration of Customs. The Saudis want crude oil higher, and they're doing a good job in achieving that end.
"It would be more difficult for the member countries to comply with the agreement because the cost of restricting production would higher".
The University of Michigan released a report on Friday showing a bigger than expected pullback in consumer sentiment in the month of November.
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