Oil commentary - 13 September 2023
Morning all, Wednesday is upon us and Q4 is peeking round the corner like a timid Jay Powell wondering if he can get back into interest rate hibernation. Hmm, more on that to come. BRENT! Get over hereeee, trading at $92.28 I see! Up 0.22 on the day and WTi is trading, well, not far off $90 either at $89.09 up 0.25. I wonder if WTi can breach the magical $90 per barrel later. Well, we have US CPI out later which will be watched very carefully and then, of course, weekly US oil inventories (builds expected on crude and products, but let’s see). Right then, what’s going on in the world of all things oily? Brent touched $92.40 yesterday the highest since a tubby bloke in a suit with red cheeks was trying to run around town and deliver gifts to everyone, and I’m referring to the Donald, of course, not Santa. Diesel prices are up, too. As are gasoline. But before you start running off to the supermarkets to go and buy half a ton of powdered milk and then write a strongly worded letter to the Daily Mail about why the government aren’t doing anything about high oil prices, let’s put things into context, shall we? I mean that nicely by the way. CONTEXT - This time last year, Brent was trading at $93.17. This time last year, ICE Gasoil was trading at $991.50/mt, today it is trading at $971/mt. RBOB (gasoline) is $2.71 cents per gallon, this time last year it was $2.56 cpg. NATURAL GAS TTF however was trading at $7.35 per MMBtu, today it is $2.743 per MMBtu, and this is really the metric I think the market, and indeed everyone, needs to look at for context. Much was written last year about energy security, primarily around gas supply as most of Europe and indeed, the world, relies on gas feedstock for either heating your abode up, or cooling said abode down. Inflation roofed on the back of this huge spike in gas prices and the cost-of-living crisis was upon us. Jackson Hole fishponds were the quietest than they had ever been as the powers that be had no choice but to start increasing interest rates to try and keep things in check. Here we are, a year later, with oil prices stable, but gas prices 60% lower. The end of inflation? Hmm, let’s see what data says later on, but one could argue that things are looking, calmer? Eyes on the headlines. Good day.