After many ups and downs, false starts and stops, the deal they said would not get done will close today in Istanbul. And I will point out, I was only one of only 2 analysts in the world that in surveys predicated this deal would happen. I knew it was going to happen because I’ve been watching OPEC all these years and I could see the signs. Even with the failed accord in Doha in April, I could see the back door talks and deal making and it was time for oil producers to come to an accord.

Saudi Arabia wanted to make OPEC great again. They made the point proving they could crash the oil market to force other producers into submission. It may have taken longer than they anticipated, but they made their point. Not only did they reduce shale oil output, they forced a major drop in oil investment that will give Saudi Arabia the edge when the market gets in balance. Which could be right now, if not soon. 

The historic deal should close today marking a rare and historic agreement for OPEC and non-Opec countries to conspire to reduce supply and increase prices. This comes as we see more evidence that the global oil market is achieving balance as Russia is juicing up production numbers and China imported 32,85 million barrels of oil in August. That import total is the second highest imports total in China’s history. This surge in imports was up a whopping 23.6% year on year for the month as imports over all are up 13% on the year. For those that tried to time Chinese demand all year, these numbers fly in the face of that logic. Not only is China still filling its strategic reserves that some thought were already filled, Chinese Teapot refineries are importing tons of oil as Chinese production falls. They are producing a lot of product that is being exported to what should be a very strong demand market in places like Iran and India.

While the International Energy Agency bemoans the build of product stockpiles, this is typical of what you see at the bottom of every oil bust cycle. The low priced products relative to crude will spur demand and eventually cut into the product glut. On top of that, we will see seasonal demand kick in and if we see a colder winter or even a more normal winter, we will see a reduction in that oil glut.

In fact, it looks like this OPEC cut will drive oil prices to where I said they would go back in January. In an interview with ETF dotcom I was quoted in January saying, "ETF.com: Assuming we avoid a global recession and the oil market balances, how high do prices go? Flynn: Well, last time we had back-to-back down years in oil was in 1998/1999, and the next year we were up something like 105%. Last year we ended around $37. If I'm right, by the end of this year, we should be pushing back toward $60, maybe as high as $70. I know that number sounds ridiculously high right now. But remember we were at $60 as recently as July, even knowing a lot of what we know now.” While we had some fits and starts it looks like history does repeat itself. The comparisons to 1998/1999 and what happen in the year 2000 in oil are almost scary. I took a lot of heat back in January for that call after we had a rough start to the year but despite the bearish calls of oil going below 10 dollars a barrel we stuck to our long term bullish outlook and we still do. While we have not hit $60 yet both the International Energy Agency and Saudi Arabia believe that that price is possible  by the end of the year.”

You can’t underestimate the impact of the historic cut backs in capital spending in Energy and too can’t underestimate OPEC and non-OPEC’s art of the deal. It’s time to make oil trading great again!

We should also see oil supply fall further in today’s American Petroleum Institute report. We see a 3 million barrel drop in crude and products. Cushing, Oklahoma supply should rise and refinery runs will fall 1.0.

Make sure you tune in today to see me on “After the Bell” with Melissa Francis and David Asman on the Fox Business Network.