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The former Saudi oil minister, Ali al-Naimi, had a habit of saying that if he knew where the price of oil was going to spread, he would be sitting on a yacht and counting his billions of dollars of commercial profits rather than talking to reporters.
It was a useful deviation tactic when one wondered if Saudi Arabia was trying to increase the price of oil by reducing its production. There was an added suspicion of disdain for the slightly wild press corps of the Opec who had chased him around Vienna before one of the cartel meetings.
But before the summer of 2019, Mr. Naimi has long since retired and his mantra is starting to feel a little more prescient. On the current oil market, few people really know where prices are going.
The influential London oil broker, PVM, said this week that the next big move in oil prices could be $ 30 a barrel in both directions, summing up the mood in an industry that is currently caught sandwiched between two of the greatest stories in the world.
On the one hand, the growing tensions between Iran and the West, which have threatened to transform the catastrophic oil market scenario into reality – supplies at risk through the Strait of Hormuz, the most important oil transport route. important in the world -.
Oil tankers were seized, US and Iranian drones were shot down and insurance premiums exploded for oil shippers in the region. But until now, the oil market as a whole has largely reacted to the threat, as prices have hardly changed since a little over 60 dollars a barrel.
Some badysts say that if the same scenario had taken place beyond the situation in Iran at the beginning of this decade, the price of oil would have reached $ 130 or more.
But the reasons they have not reacted in the same way today illustrate the difficult situation in which many crude oil traders feel confronted.
The hope is that the United States and Iran will avoid the conflicts arising from the latest Gulf crisis and that much of the oil will continue to cross the strait, but there are fears that the global economy will slow down. and that the demand for oil is growing lukewarm.
The continued expansion of the American shale oil industry also means that many traders expect the oil market to be in surplus this year and next, despite sanctions imposed by Iran and Venezuela following the sanctions imposed by the United States and Opec's efforts against Russia.
The long-term future of oil demand growth is also threatened by increased public and political support for reducing emissions and limiting global warming.
This left the opinions on the market finally balanced. To be clearer, gross management traders are faced with some kind of blind punt.
A serious disturbance in the Gulf could still drive up prices. A recession or a resolution of tensions between the United States and Iran could see them collapse.
The result was a relative stasis in the major crude oil benchmarks, interspersed with an occasional wild swing that quickly reversed itself. Signs that the United States and Iran are seeking a resolution? Sell, sell, sell. Another tanker threatened? Buy, buy, buy. But the underlying price has not moved steadily in one direction or the other for some time.
There are some clues about what might happen next. The latest hedge fund positioning data suggests that the financial community has been rather bullish in recent weeks as net oil buyers. It is clear that a few courageous people are always willing to position themselves so that prices will strengthen, even if there is still a lot of money in reserve.
But one of the biggest warning signs for the market for a long time comes from the oil futures curve, which has weakened sharply in recent days.
Until recently, Brent's immediate delivery contracts were trading at a significant premium – which generally indicates that supplies are relatively tight and traders are willing to pay to secure the barrels.
But this premium has largely disappeared, delivery contracts for Brent in September being almost at par with those for delivery in October, down from a premium of almost $ 1 there is no so long. Even if this evolution can be explained in part by the short-term positioning of speculative traders, it still suggests a calm on the market. Could the bearish side be quietly gaining the upper hand?
Perhaps, but the only certainty is that there is little conviction. For casual investors, the best advice is to stay clear until the dust settles, if you ever want to have a chance to relax on a yacht.
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