Oil has exerted its pull over the last week of trading, creating a listless market in the wake of its decline, traders told CNBC on Tuesday.
“Every time they go above those production levels they’re going to say that it was for in house, basically, storage,” Steve Grasso, director of institutional sales at Stuart Frankel, said in an interview with “Closing Bell.”
“I think [oil] is really in charge of sentiment and directionality in the marketplace.”
Grasso cites the influence of state-owned Saudi Aramco. “Everyone is ignoring that,” he said. “And for me it’s such a contrived effort to keep oil prices higher.”
He says the path of least resistance is lower in oil, something the market is finally starting to realize.
Saudi Arabia, the largest member of OPEC, reported a jump in production, surprising markets and causing a decline in oil stocks, hitting a three-month low earlier Tuesday. The group agreed to curb its output last year, reducing a global oversupply of crude and keeping values higher.
Oil stocks have continued to decline, hitting a three-month low earlier on Tuesday.
But not all analysts share Grasso’s sentiment.
“I’m not sure why this [is] much of a focus right now,” said Francisco Blanch, global head of commodities research at Bank of America. “The Saudis have always been trying to push the market into it,” he told “Closing Bell.”
He believes encouraging more hedging by oil producers can anchor future prices as inventory drops.
To other traders, the recent news may not be recent after all.
“In the not-so-distant past, I remember oil dictated what the market did,” Virtu Financial’s Matthew Cheslock said. “We’re starting to see that a little bit more.”[“Source-cnbc”]