firewall freeze OPEC

Oil supply "freezing" is a joke. That much was confirmed Tuesday in comments made separately by the oil ministers of Saudi Arabia and Iran. The latter is called "ridiculous", not less.

The punchline? The joke is on OPEC.

There are several problems inherent to the freezing obvious problems, so that members of OPEC and other major producers such as Russia not to increase its oil production from current levels, not least already producing too much oil for the market is supposed absorbed.

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But there is a more subtle effect that really works against the likes of Saudi Arabia: Freezing expectancy increases. In particular, the hope in the world otherwise largely depressed energy financing arises.

Monday night, before those oil ministers freeze ice cream, Cabot Oil & Gas, a company exploration and production in the United States, announced that it had sold a upsized offering of new shares ultimately should gain about $ 1 billion.

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Now, Cabot is overwhelmingly a producer of natural gas, so you may be wondering what this has to do with the freezing of oil.

However, shares of Cabot actually monitor oil futures a little more closely than it does gas futures: Its coefficient of correlation with oil in the last year is 0.45 against 0.31 for gas, according to data compiled by Bloomberg.

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