Business and users of crude oil that did not buy into the lower for longer talk are giving thanks this Thanksgiving for having hedged their oil, gasoline and diesel purchases. Suddenly, the oil glut that many had predicted would last forever has suddenly turned into a very tight market.
There is a temptation to attribute the recent rise in oil prices to just the uncertainty of the political purge that we have seen in Saudi Arabia, but if you think that you are missing the larger point.
It seems the move by Saudi Arabia’s Crown Prince Mohammed bin Salman to arrest members of the royal family and their business associates in a corruption crackdown is proving to be wildly popular among the Saudis young population.
The House rolled out its tax reform bill and not only did it put in a big tax cut for all corporations it also gave oil producers an edge by removing incentives for electric vehicles and solar companies.
The bullish fundamentals on oil are becoming more apparent as both Saudi Arabia and Russian are signaling that they are committed to reducing the global oil supply glut and that they are signaling an extension of the current production cut agreement to the end of the year.