"This is what sparked the selloff last month … when Saudi cut the prices aggressively to Asia," said John Kilduff of Again Capital. "This means that, obviously, they're not as concerned about supply since they've seen a pickup in demand."
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Many have been speculating that at its Nov. 27 meeting OPEC might cut production to curb recent price declines in crude. Kilduff says that he thinks OPEC won't take any action in November because not only can the cartel withstand further price declines, but it also wants to pressure U.S. suppliers to scale back their production.
"The Saudis are betting on the fact that winter season demand is going to bail them out," Kilduff said. "The proof is in the pudding with this price cut that they're feeling more confident about the market."