Oil commentary - 12 November 2021
Morning all.?Friday.?And welcome to it.?Brent is trading this morning at $82.28 down 0.59 and WTi is trading down 0.55 at $81.04.?You know, I really should listen to people who are clevererererer than me more often.?I was recently told "meh, market seems a bit stale to me, think we might be kind of flat to end of the year".?My response??"Mateeeee, no wayyy this market is crazy! I don't see that at all".?Yeah, nah.?Shut me right up didn't it.?At the time such sage mentioned flateus marketus (that's Latin for flat market), Brent was trading at $82.74.?Today we are trading at $82.28.?So, he was right, I was wrong.?Yeah, foot, mouth, insert.?It's funny though because it all seems a bit chaotic, doesn't it??A bit like the Tasmanian Devil and Ewan McGregor from Trainspotting are the only people trading this market.?It’s frantic and volatile, but it's flat.?I don't think the rally we have seen over the last twelve months has run its course yet as well, if I'm honest.?I mean, can we even still call it a rally??Forget what happened last April when WTi traded down to negative and Brent down to $20.?Let's use this time last year as a starting point for the real recovery in Brent.?12th November 2020 Brent was trading at $43.53.?Today, $82.28.?Brent has nigh on doubled its value in a year.?If we were to pop up to $90 before the end of November, which I think is a very distinct possibility, then that would only be a percentage increase from today’s level of 10%.?I think that is firmly in the crosshairs of the bulls and if they have their merry way and have been good boys and girls then who knows??$100 by Christmas??I wouldn't be surprised if Santa did have that is in his sack, absolutely.?Why though??Two reasons.?One, money is still piling into oil from the funds and the banks, maybe not with the same ferocity as it did when vaccines were announced nearly a year ago, but some sizeable capital still favours the black stuff. Two, the "energy crisis".?Things are better than they were when it comes to issues around finding enough gas to cope with a cold winter, but the risks are still very much there unless Russia, and others, continue to keep the taps open.?This risk is manifesting itself into the energy complex remaining supported and Brent will happily piggyback on that.?Even if some funds are looking at the US dollar instead of oil and are taking some profit, I think prices will continue to trend upwards through the rest of the year.?Blimey, today’s commentary was almost serious.?Fear not, an early cracker for you for the weekend - What do angry mice send to each other at Christmas??Cross Mouse Cards.?I mean come onnn!?Have a great weekend.??