Oil was falling before some comments crossed from US envoy Hochstein but this added to it:
- Welcomed major change in attitude from OPEC+
- Hopes OPEC+ will move to Step 2 of supply boost
- Hopes OPEC continues putting on more supply
- Says US can assess more SPR releases after October
This cryptic ‘step 2’ comment suggests the US has pushed a plan for further supplies on the Saudis. You start to wonder if they have MBS in their back pocket.
The comment about further SPR releases is interest as well, though the reserve is already at the lowest since 1986. At some point, the need to refill it will put upward pressure on the back end of the curve.
In any case, the intraday chart of oil shows the peak at $114 and drift lower since:
Ultimately, the potential for a super spike in oil comes when OPEC is out of spare capacity and the US has no more realistic oil reserves to release. That might not be far away.