Experts say the price falls reflected the fact traders had adopted a ‘buy the rumour and sell the fact’ approach to the meeting, which was expected to limit supply more aggressively.
Prices had already fallen slightly before the meeting when Saudi Arabia’s oil minister signalled further supply reductions were unlikely to be agreed.
Ashburton’s Global Energy Fund manager Richard Robinson said OPEC’s agreement to continue to reduce supply for a further nine months was “remarkably collaborative”.
“However, despite the fact that the production cuts were extended, there is remarkably little evidence that market participants have positioned their portfolios for the effects of an extension,” he said.
“Open interest from money manager net longs are at their lowest level since records began in 2011 and shorts… are within touching distance of their all-time highs.
“This confluence between the consensus that OPEC will extend their cut and the negative positioning of portfolios highlights a potentially misconstrued ambivalence to the effectiveness of the cuts.”
He said assuming the first six months of OPEC supply cuts would have the same negative effect on prices as the nine months to come could be a “costly error” for “those caught short”.
