OPEC Cartel Agrees to First Production Cuts in 8 Years; Commerzbank Calls Cuts ‘Completely Worthless’

Such generosity by the House of Saud, restricting the supply of crude to record levels, burdening their people with deleterious volume reductions in order to smash us over the skulls with sharply higher prices.

RIGGEDENOMICS

What’s interesting to note, aside from the cartel’s first cut in 8 years, is the fact that traders are jumping in like lemmings without putting these cuts into context. Let’s explore, shall we?

As you can see, quite clearly, OPEC had been pumping out crude as fast as their devilish hands could pump the stuff, up until now. With these cuts, production will plunge to 32.5m bpd — levels not seen since  April of 2016!

Clearly traders are squeezing the life out of those who bet against this cut. Goldman lured their clients to the cliff and kicked them over — suggesting an OPEC cut had only a 30% chance of occurring.

OPEC clinched a deal to curtail oil supply, confounding skeptics as the need to clear a record global crude glut — and prove the group’s credibility — brought about its first cuts in eight years, Bloomberg News reports.

OPEC will reduce production by 1.2 million barrels a day to 32.5 million a day, a delegate said Wednesday in Vienna, asking not to be identified as the decision isn’t yet public. Oil jumped 7.6 percent to $49.90 a barrel in London at 1:23 p.m. local time.

After weeks of often tense negotiations, the Organization of Petroleum Exporting Countries’ three biggest producers — Saudi Arabia, Iraq and Iran — resolved differences over sharing the burden of cuts to rein in supply for the first time since 2008. Notably, it appears the Saudis accepted that Iran, as a special case, can raise production to about 3.9 million barrels a day. The agreement is also likely to include a reduction of about 600,000 barrels a day by non-OPEC countries.

WTI and Brent are enthusiastically soaring this morning, higher by more than 7%.

Commerzbank calls the cuts ‘completely worthless’.