Oil oversupply a ‘double-edged sword’ for OPEC, analyst says from CNBC.
If OPEC remains fixated in inflating oil prices, they will simply hurt their customers in a weakening global growth environment.
What oil prices are showing is simply that we were living a mirage of bullish estimates and artificial inflation of prices, and it lasted very little.
If you want to be bullish oil from here you need to believe in three things:
- OPEC greed (probable)
- Global demand growth rising (improbable)
- Rates falling and leveraged bets increasing (unlikely)
The reflation trade never existed. It was simply part of the fallacy of synchronized growth, and it is dissipating alongside the central-planned myth of GDP growth by design.
So, essentially, prices of oil futures were over inflated relative to expected spot price due to bets that OPEC would succeed in inflating oil prices by restricting oil production and now we are beginning to see that OPEC is failing and contango is in effect?
Exactly.