1/THREAD: EASTER OPEC+ CUT DEBUNKED

Ok, it's official. OPEC+ has agreed to a 9.7mm bbl production cut. This thread will debunk the nonsensical reporting from the Financial Flintstones (cable networks) and explain why the cut is nothing but theatrics and propaganda. https://twitter.com/anasalhajji/status/1249394413677301766

2/ To be sure, the hype OPEC+ is creating and which the media are falling for is likely to spike markets higher, at least temporarily.

But in the end, this cut amounts to meaningless, irrelevant propaganda that will have no real effect on the balance of supply and demand.

3/ The REAL SIZE OF THE PRODUCTION CUT will be upwards of 20mm bbl. It will be driven by market forces, and it was certain to happen with or without this bit of holiday propaganda from OPEC+.

@anasalhajji has written several articles. His latest: https://twitter.com/anasalhajji/status/1249384751192031232

4/ Likewise, @aeberman12 and I made several of the same arguments a full week ago in this podcast, which is still relevant today:

https://www.macrovoices.com/podcasts-collection/macrovoices-hot-topic-podcasts/823-hot-topic-12-oil-market-special-with-art-berman-and-nate-hagens

5/ Executive summary: OPEC+ cuts are only relevant if they reduce supply more than market forces would have forced without them.

On the other hand, the coming Saudi OSP cut is definitely relevant to near-term prices. Anas covers that well in the above-linked article.

6/ The only long-term significance I see to today's 'epic cut of historic proportions' is that it MAY have the effect of brining some equity to the question of whether producers cut on equal footing or at different paces as forced by their own economic circumstances.

7/ The important signal to watch now is the DURATION of the nearly certain upward reaction in oil prices, as well as the degree and duration of the flattening of the front end of the term structure.

8/ Thursday's price action implied that the market had already "seen through the irrelevance of the official cut". But the Flintstones are going to hype this up as the most epic, historic cut ever in the history of the world.

9/ How LONG that rhetoric can sustain elevated crude prices and reduced front-of-curve contango is a very important signal, and will portend how much more downside is left in flat prices after the propaganda blitz wears off.

10/ Bottom line, a cut MUCH larger than what was just announced was already CERTAIN to occur, and would have been caused by market forces. That will still be the final determinant. But the process and coordination between producers may be more coordinated thanks to this cut.

11/ It's also worth pointing out that the fact this news came just a couple hours before a thin-liquidity holiday futures open was no accident.

Same exact playbook as Thanksgiving 2014, and both events were planned that way in advance.