• Tag Archives OPEC
  • The Single Biggest Bullish Catalyst For Oil

    One of the key objectives for OPEC is to bring down inventories, a goal that has been elusive this year. But if the oil futures curve is anything to go by, the oil market is showing signs of tightening.
    Brent futures have recently begun to exhibit a state of backwardation, which is when near-term oil futures trade at a premium to contracts dated further off into the future. This is the first time in years that backwardation has occurred, and most analysts are taking it as a sign that the oil market finally could be getting closer to rebalancing. In the past, backwardations have accompanied a rebound in the oil market after a bust, while a contango (the opposite of backwardation) tends to occur when the market crashes because of a supply glut.
    There are several reasons why backwardation is bullish, which has been discussed in previous articles. A declining futures curve makes it uneconomical to store oil, so backwardation could accelerate the drawdown in inventories. It also complicates the hedging strategies of shale producers, which could hold back expansion plans. It also is a symptom of tightening near-term supplies, although, to be sure, the flip side of that argument is that it could merely be a reflection of expectations that the supply glut will reemerge at some point in the future.

    This post was published at Zero Hedge on Aug 17, 2017.

  • World Equity Indexes Mostly Up; OPEC Meeting In Focu

    This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
    (Kitco News) – World stock markets were mostly firmer in overnight trading, following the gains posted on Wall Street Friday. Focus early this week is on a two-day OPEC meeting. U. S. stock indexes are pointed toward firmer openings when the New York day session begins.
    Gold prices are weaker on some follow-through selling pressure from Friday’s losses that came in the wake of an upbeat U. S. jobs report that favored U. S. monetary policy hawks who would rather see another Fed rate hike soon.
    The U. S. dollar index rallied following the jobs report and closed at a bullish weekly high close Friday. That is an early technical clue that a market bottom is in place. However, the greenback is a bit weaker on a corrective pullback Monday, and is still in a solid price downtrend on the daily chart.
    Nymex crude oil futures are lower in early trading Monday and trading just below $49.00 a barrel. Oil market watchers are awaiting news coming out of this week’s OPEC meeting in Abu Dhabi. Many believe some OPEC members are cheating on their production quotas, and the meeting will address that matter.

    This post was published at Wall Street Examiner on August 7, 2017.

  • Dow To Rise Above 22,000 On Apple Earnings; Europe Pressured By Surging Euro

    Nasdaq 100 futures jumped 0.8% after Apple surged to record highs following a strong beat and optimistic projections ahead of the launch of the company’s new batch of iPhones. Eminis are little changed, up 0.1% to 2,475, trailing Asian markets, while European stocks and crude oil fall.
    Apple surged 6% after-hours to a new record highm taking its market capitalization above $830 billion. That should help carry the Dow through the 22,000 mark when the market opens. Among Asia’s Apple suppliers, LG Innnotek jumped 10 percent and SK Hynix, the world’s second-biggest memory chip maker, rose 3.8 percent. Murata Manufacturing firmed 4.9 percent and Taiyo Yuden 4.4 percent, helping the Nikkei up 0.47 percent.
    “It is all about Apple,” said Naeem Aslam chief market analyst at Think Markets. “The firm comfortably topped its forecast and produced stellar numbers for its revenue and profit.
    Oil came under pressure again as higher than expected US inventories and reports of rising OPEC output helped drive prices below back below $48/bbl (WTI crude). In FX markets, the USD dollar gave up some gains late in the session with DXY edging down by 0.1% and the euro rising to $1.1827. Treasury yields are 0.5-2bps higher across the curve with the 10y at 2.273%.

    This post was published at Zero Hedge on Aug 2, 2017.

  • WTI Tumbles After Surprise Crude Inventory Build

    Following the ugliest day in a month for WTI (on OPEC production increase survey), bulls hopes rest on tonight’s API data confirming the recent trend of inventory draws but that was not to be. Against expectations of a 3.1mm draw, API reported crude inventories built by 1.78mm barrels last week. The kneejerk reaction was clear – down hard.

    This post was published at Zero Hedge on Aug 1, 2017.

  • Oil Just Plunged To A $48 Handle After Survey Suggests OPEC Output Jumped In July

    Extending losses from Goldman’s overnight report noting the minimal impact of Venezuelan sanctions, WTI crude just crashed below $49 on heavy volume after Bloomberg reports that a survey suggests that OPEC’s July oil output rose by 210K to 32.87mmb/d, led by growth in Libya who upped production by 180Kb/d to the highest since June 2013.
    The recovery of crude production from Libya is undermining OPEC’s efforts to curb its output as the African nation pumps unabated.
    Total crude production from the Organization of Petroleum Exporting Countries in July rose 210,000 barrels a day from June to reach 32.87 million barrels a day, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.

    This post was published at Zero Hedge on Aug 1, 2017.

  • WTI Jumps Above $50 On Report US Prepping Sanctions Against Venezuela Oil Industry

    After both Brent and WTI rose above their respective 50DMAs on Friday, capping 2017’s best weekly rally for oil, the rising tide is accelerating as the latest CFTC COT data confirmed, when net specs boosted bullish Nymex WTI crude oil bets by 27K net-long positions to 423K, the highest in two months, as producers continued to cover short hedges, sending their net position to the most bullish since the summer of 2015.

    Meanwhile, oil started the Sunday session jumping out of the gate, with WTI rising above $50 for the first time since May in early Asian trading, following the usual non-material weekend chatter and “noise” out of OPEC (which to exactly nobody’s surprise “can’t stop pumping“), however what has attracted traders’ attention, is a WSJ report that following last week’s latest round of sanctions, and after today’s vote to overhaul Venezuela’s constitution further entrenching Maduro’s unpopular regime, US government officials are considering announcing sanctions against Venezuela’s oil industry as early as Monday, although as the WSJ notes, a full-blown “embargo against Venezuelan crude oil imports into the U. S. is off the table for now.”

    This post was published at Zero Hedge on Jul 30, 2017.

  • Chinese Leverage to Kill Petro-dollar

    The Chinese Govt is greatly irritated by the requirement to use USDollars in payment for crude oil in the global market. The Beijing officials finally have some leverage in arranging for a major deal to pay for crude oil in RMB currency, their Yuan. The negotiations have been in progress for a couple months. The development is not covered well in the financial press, not even in the alternative media. It will happen, just a matter of time. Its effect will be far reaching and likely devastating.
    The global currency reserve status for the USDollar is at severe heightened risk. It will not be deposed via financial markets, like with a bond market failure or a COMEX gold market default with bust. Such is folly to imagine as likely to occur. The Western bankers are expert at rigging the financial markets, one and all. Their central bank bond support has extended to stock market support, soon to corporate bond wide support also. The USGovt is hanging onto its power base in increased isolation. The assaults are on many flanks and platforms.
    Its essence is the sale of crude oil universally in USDollar terms. Typically the payment form is the USTreasury Bill. The OPEC crew typically sock their surplus petro dollars in USTreasury Bonds. The sale proceeds never exit the USD form. The deal was struck in 1973 by the Rockefeller agent named Heinz Kissinger. It came in the wake of the abrogated Bretton Woods Gold Standard, which Nixon violated with force and audacity. In fact, the arrangement was suggested by the US side of the table. Nevermind that it was Rockefeller who hatched the idea of a tripled oil price, the exact opposite of what has been inscribed in the historical annals. The other little item in the Petro-Dollar defacto standard treaty is that the Saudis, along with the Gulf Arab neighbors, would buy USMilitary hardware exclusively. The USGovt would provide them with plenty of regional conflict. Over the four decades since, the Arabs have accumulated a few cool $trillion in USTBonds. The TIC Report on foreign bond assets is a gigantic fabrication. Most Saudi bond holdings have been hijacked and stolen, used as the core to the USDept Treasury’s vaunted Exchange Stabilization Fund. They will never see at least $3 trillion in sequestered bonds. A joke here, since the ESFund is the most secretive multi-$trillion fund in human history.

    This post was published at GoldSeek on July 30, 2017.

  • WTI Tumbles Towards $45 Handle After Tanker-Tracker Signals OPEC Supply At 2017 Highs

    Despite the ‘bullish’ inventory data (and demand), WTI Crude just sank towards a $45 handle – red on the week – as tanker-tracking firm Petro-Logistics signals OPEC crude supply rising again this month will be the highest this year (along with US shale output at record highs).
    As Bloomberg notes, supply from OPEC members is set to exceed 33 million barrels a day this month, more than 600,000 barrels a day higher than the first-half average, according to Petro-Logistics. The data could reinforce skepticism about the effectiveness of the Organization of Petroleum Exporting Countries’ production cuts as officials from the group gather for meetings in St. Petersburg, Russia.
    This pushed prices below the pre-DOE data lows…and red for the week.

    This post was published at Zero Hedge on Jul 21, 2017.

  • Global Equity Markets Lifted By Upbeat Earnings, Rebounding Crude Oil

    This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
    (Kitco News) – World stock markets were mostly firmer overnight, supported in part by upbeat corporate earnings reports and the recent rally in crude oil prices. U. S. stock indexes are pointed toward slightly higher openings when the New York day session begins.
    Gold prices are weaker in pre-U. S. trading on a corrective pullback from recent gains that pushed prices to a three-week high on Tuesday.
    In overnight news, the German government 30-year bond (bund) fetched an average yield of 1.29%, which is a nearly two-year high.
    The ‘outside markets’ on Wednesday morning see Nymex crude oil futures slightly higher and trading around $46.50 a barrel. Recent upside price action suggests a market bottom is in place for oil. However, talk of OPEC over-production and big U. S. stockpiles will limit the upside for crude.

    This post was published at Wall Street Examiner by Jim Wyckoff ‘ July 19, 2017.

  • The Technical Failure That Could Clear The Oil Glut In A Matter Of Weeks

    OPEC exports have come under pressure this week from technical threats to oil fields, with Saudi Arabia’s Manifa problems grabbing the headlines.
    Saudi Aramco CEO Amin Nasser, while addressing the World Petroleum Congress in Istanbul, stated that the outlook for oil supplies is ‘increasingly worrying’, due to a loss of $1 trillion ($1000 billion) in investments last year. The skepticism shown by a majority of financial analysts and oil commentators about the real threat to global oil (and gas) production volumes was countered by the news that the production at Saudi Aramco’s main offshore oil field, Manifa, has been hit by technical problems. News sources reported that the output from Saudi Aramco’s massive Manifa oilfield has been hit by a technical problem.
    The impact of this possible technical mishap is not to be underestimated. Aramco’s Manifa is one of its biggest oilfields, with a targeted production capacity of around 900,000 bpd, to be brought onstream in two phases. At present, the main issue being reported on is that there has been corrosion of the water injection system, which is used to keep pressure in the reservoir. No facts have emerged about the total impact on the Manifa production capacity, but unnamed sources are already quoting ‘millions of dollars’ of losses. The current reports are not really worrying, as corrosion control in a water injection system is only a technical challenge. Maintenance of the field is expected, resulting in a shut-down of production – something that has been confirmed by Sadad Al Husseini, former VP Aramco. If the all production needs to be shut-down, Saudi Aramco’s overall production capacity will be cut by 900,000bpd.

    This post was published at Zero Hedge on Jul 14, 2017.

  • Gartman Covers Oil Short

    Two days ago, when oil was plumbing its latest cycle lows, Goldman came out with a “contrarian” note in which it admitted that its bullish commodity outlook had been wrong, and cautioned that absent “shock and awe” from OPEC, oil could drop below $40, to which our logical counter was that this likely capped the latest crude selloff, but there was one outstanding item: the world-renowned momentum chaser, Dennis Gartman: “As to whether this means that the “suddenly” skeptical Goldman, which as we sarcastically pointed out was selling oil throughout its entire “bullish phase”, is now finally buying WTI, consider that Gartman remains bearish and do the math.”
    Fast forward 48 hours when after the latest rebound in oil, Gartman is no longer bearish…

    This post was published at Zero Hedge on Jul 13, 2017.

  • Another Day, Another V-Shaped Panic-Buying Spree in Crude Oil

    Suuposedly catalyzed this time by EIA forecast production cuts, WTI crude has spiked off an early tumble for the 3rd day in a row, running stops above $45. It appears the algos missed the fact that EIA also cut its price forecasts for the next two years, cut demand growth estimates, and confirmed OPEC production is higher than expected…
    The trigger – apparently:

    This post was published at Zero Hedge on Jul 11, 2017.

  • WTI Tumbles Back To $43 Handle After Saudis Breach OPEC Agreement

    Having v-shaped recovered yesterday after disappointing Russian comments (on no news whatsoever), crude prices are tumbling once again this mornig, WTI back to $43 handle, after Saudi Arabia told OPEC it pumped 10.07 million barrels a day in June, a person with knowledge of the data said, exceeding its production limit for the first time since brokering a deal to curb global crude supply to counter a glut.

    This post was published at Zero Hedge on Jul 11, 2017.

  • “When The Facts Change”- Oil’s Biggest Cheerleader Capitulates: Andy Hall’s Full Bearish Letter

    After years of being oil’s biggest cheerleader, “oil god” Andy Hall, who starting with the OPEC Thanksgiving massacre in 2014 has had several abysmal years, in the process losing the bulk of his AUM, finally threw in the towel last week when in a July 3 letter to investors, he admitted that “the facts have changed” and that “fundamentals have deteriorated significantly” adding that “demand growth seems to be somewhat less than anticipated while supply keeps surprising to the upside… the expected acceleration in inventory drawdowns has not materialized… disappointed expectations for accelerating stock draws following the arrival of peak seasonal demand. Meanwhile, U. S. shale operators have continued to add rigs at a surprisingly fast rate thus raising the odds for significant oversupply in 2018, even if OPEC maintains its production cuts beyond Q1. Over the past month, the market has in effect priced in two negatives, one long-term, the other short-term.”
    More importantly, Hall confirms what we have said for the past two years and what most so-called experts have missed: namely that “shale is now the marginal barrel” and adds that “if the marginal cost of oil for the next 3 or 4 years really is headed to the mid-$40 range then OPEC’s attempts to push prices to $60 seem futile” adding that “It is unlikely that OPEC will find the cohesion necessary to keep prices at an artificially elevated level if all it does is accommodate rampant growth in shale oil production.”
    That line of thinking raises the possibility of yet another reversal in OPEC policy – abandoning supply management and letting market forces balance supply and demand. This would obviously result in significantly lower prices, at least in the short term. On the other hand, with many OPEC countries needing much higher prices for fiscal sustainability (for Saudi Arabia the level is over $80), there is an inherent instability which adds to the geopolitical risks to supply. But for now, it seems likely that OPEC, led by Saudi Arabia, will stay the course with its current policy of production restraint. Oil at $45-50 is preferable to it being at $40 or below, even if the loftier target of $60 has proven elusive.

    This post was published at Zero Hedge on Jul 8, 2017.

  • BofA Stunned By Drop In Gasoline Demand: “Where Is Driving Season?”

    Exactly six months ago, when oil bulls still held on to some fleeting hope that OPEC may somehow stabilize the crash in oil prices despite the shift in marginal oil production from low-cost OPEC producers to US shale (a hope which is now gone as the just disclosed letter from Andy Hall demonstrates), Goldman noticed something troubling: an unprecedented collapse in gasoline demand. As the firm’s energy analyst Damien Courvalin said on February 8, when discussing the 6% fall in US gasoline demand, such a plunge “would require a US recession” and add that “implied demand data points to US gasoline demand in January declining 460 kb/d or 5.2% year-on-year. In the absence of a base effect, such a decline has only occurred in four periods since 1960 during which time PCE contracted.”
    Now, 6 months later, the situation is very much different: with the US now inside peak summer driving season, the cyclical drivers behind gasoline supply and demand are vastly different, and yet something has remained the same: gasoline demand in the US simply refuses to rebound, surprising analysts by how weak it is. So weak, in fact, that Bank of America has released a note which, like Goldman half a year ago, reveals confusion about why – if the economy is indeed strong – demand hasn’t kept up and has prompted BofA’s energy analyst Francisco Blanch to ask “where is the driving season?” and, more specifically, “is this year’s driving season over before it began?”

    This post was published at Zero Hedge on Jul 8, 2017.

  • Asian Metals Market Update: July-07-2017

    Factors which can affect markets
    Fundamentally there is no positive news for gold and silver. They are just moved by US interest rate trends and global bond yields. This correlation will be over by September and new correlations will be seen. A stronger US economy can result in initial losses for bullion but will start another 2003 type bull wave in gold. Excess will happen in a world where algorithmic trading/robots trade. The restarting of another super bull run is getting delayed by another few years.
    Gold and silver are looking very bearish at the moment. Higher geopolitical risk has not lent support to bullion. Today’s US June payrolls need to be lower than 140,000 to start some short term rally in gold and silver. Crude oil’s failure to rise after a bad US inventory report can result in a ten percent fall in the short term. One needs to remain on the sidelines today.
    The fall in crude oil prices reflects fundamentals. It is also the US style way of ensuring that the key crude oil producing nations exhaust their crude oil wells and US replaces OPEC as the price dictator of crude oil prices. Every war in the 21st century by America and NATO allies is for energy and minerals. This will continue.

    This post was published at GoldSeek on 7 July 2017.

  • Enter The NatGas Cartel

    The King Dollar is mortally wounded. Many notice but the masses seem largely unaware. Since 1971, the Gold Standard has been removed from its anchor position. But since 1973, the Petro-Dollar has taken its place. It has called for crude oil sales led by the Saudis and OPEC to be transacted in USDollar terms, for oil surpluses to be stored in USTreasury Bonds, and for some kickbacks from the Saudis to the USMilitary complex for weapons purchases. Of course, the US is ready willing and able to create strife and to foment wars whereby the Arab oil monarchs will need more weapons. Since 2014, many events have pointed to the crippled condition of the important link between the USDollar and crude oil. The price has plunged by 50% of more, and not recovered. It is currently lurching in the nether bounds near the $45 level. Anything less than $65 to $70 per barrel is very dangerous for keeping the oil sovereigns afloat and for keeping the US energy sector solvent. Witness the Wall Street banks having tremendous problems with impaired bonds and toxic energy portfolios. They seem not resolvable. They cannot keep the oil price over $50, a sign of their impotence.
    Not enough financial analysts connect the new normal of a much lower crude oil price with the eventual vanishing act of the Petro-Dollar. The Wall Street banks are deeply exposed on their entire energy portfolios, which include both bonds and commercial loans. Tens of $billions will have to be written off as loss, beyond the $billions already declared as losses. These corrupt banks have worked their magic to lift the oil price above the $50 level, but failed. They worked the task for over a year, but failed. They need an oil price over $60, but failed. The Saudis did not help the cause, by their ongoing extra output to finance their filthy Yemen War. The Saudis earned the anger of their OPEC partners, especially the Gulf Arab allies. The Wall Street banks deeply resent the Saudis for this deed, but the USMilitary complex loves the Saudis. The other Arab oil producers also harbor consider rancor toward the Saudis, who really have no friends in the entire Persian Gulf region. They are so worthy of a palace coup, which would bring clamors of rejoicing in many corners of the West if it were to occur. The day might be close.

    This post was published at GoldSeek on July 5, 2017.

  • It’s Time to Privatize Our Stockpile of Crude Oil

    The Trump Administration is reportedly considering plans to sell off about half of the Strategic Petroleum Reserve (SPR), which is the federal government’s nearly-700 million barrel stockpile of crude oil. Such a move would help ease the budget crunch (bringing in about $17 billion at current oil prices) but would also (partially) return the function of resource allocation back towards the private sector. If the government leaves prices alone, the market is the best mechanism for storing reserves and easing supply shocks.
    What’s the Purpose of the SPR?
    The SPR was formed in 1975 amidst the scares over the OPEC embargo and perceived ‘energy shortage.’ As part of its membership in the International Energy Agency (IEA), the US committed to maintain a 90-day stockpile of net petroleum imports. [1]
    The idea of the SPR is straightforward enough: The federal government will maintain a ‘strategic’ reserve of crude, so that Americans will not be as vulnerable to a major disruption in the world oil market.
    However, just as we don’t ask the federal government to build cars or grow food, there is also no theoretical reason that it should be in charge of emergency stockpiles of oil. Nicolas Loris had a thorough analysis on privatizing the SPR back in 2015, but in this post I’ll hit the main points.
    Here is the Energy Information Administration’s breakdown of US petroleum stocks as of May 26, 2017 (the latest available at this writing):

    This post was published at Mises Canada on JULY 3, 2017.

  • Saudi Reshuffle Could Completely Shake Up Oil Markets

    Authored by Nick Cunningham via OilPrice.com,
    The power restructuring in Saudi Arabia this week led to the elevation of 31-year-old Mohammed bin Salman to crown prince, essentially ensuring that he will become the youngest king of Saudi Arabia in the not-too-distant future. The heir apparent has already been effectively running the country for the past few years, so the move was not entirely a shock. Nevertheless, the effects on the oil market could be profound.
    The new crown prince is known to be a bit unpredictable. In the early phase of the oil price meltdown, he said that prices did not matter. But the plunge below $30 per barrel in early 2016 seemed to have changed the calculus. Last year Saudi Arabia became the principle driver behind a return to ‘market management,’ that is restraining output to stabilize prices.
    With the OPEC production cuts – which have had to be extended from six to 15 months – still proving to be insufficient at balancing the market, it is not entirely impossible that the crown prince might reverse course yet again at some point and return to a ‘market share’ strategy. Or he could decide to deepen the cuts, an idea floated a few days ago by the Iranian oil minister. For now though, higher prices are surely to be the goal, particularly with the IPO of Saudi Aramco not far off. Either way, after Mohammed bin Salman and King Salman ousted former oil minister Ali al-Naimi last year, they have tighter control over the kingdom’s oil policy.

    This post was published at Zero Hedge on Jun 23, 2017.

  • Gartman Turns Bullish On Oil

    There has been a distinct shift in sentiment when it comes to oil this morning: after plunging 22% from its February highs, many commentators are suggesting that the bottom is finally in and that it is time to turn “contrarian.”
    One among them is GS Banque’s Loic Schmid, who posits three ideas on why oil is weaker:
    Is it the hedge funds? They have massively cut back their net exposure. Is it supply? There is currently too much output. Is it demand? Recent US macroeconomic figures have been rather disappointing. Which prompts him to ask if this is the time for a logical bounce, as oil at $42.50 is a problem for the industry and OPEC, and shows that we are currently close to the bottom of the range and technical indicators suggest that oil is oversold, noting that “we would not be surprised if OPEC trims output in the next few days…”

    This post was published at Zero Hedge on Jun 22, 2017.