Oil commentary - 14 September 2017
Morning all. Brent closed up 0.89 last night to $55.16 and WTi closed at $49.30 up 1.07. So EIA stats were pretty much as people should have assumed the would be, albeit gasoline draws were high, the most since records began in fact. However the market decided to react to EIA numbers with the same happiness as every Tottenahm fan did that they FINALLY WON AT WEMBLEY!! Up we went. I'm not quite sure why as well tbh. This set of data from EIA was only driven by the effects of Hurricane Harvey - it has no bearing on where demand is going to be coming in to Q4 and in fact US production ROSE last week. Plus stocks at Cushing were up. The only reason for the rally can be because refinery runs were so low but most of the majors are restarting them so perhaps there will be more demand for some of the North Seas finest black stuff. It looks to me like the US is producing, and has enough in storage, to meet the increased demand from the refineries restarting so I see this as a false dawn for a further spike in Brent. Here's an interesting fact for you - Barbie's full name is Barbara Millicent Roberts. No seriously, here's a fact for you - In Aug 2007 OPEC production was 30.3 mn bpd approx, Aug 2007 Brent was $77.40 per bbl. In Aug 2017 OPEC production was 32.76mn bpd, Aug 2017 Brent was $52.38. Aug 2007 US oil production was 5.07mn bpd, Aug 2007 WTi was $74.04. Aug 2017 US production was 9.5 mn bpd, Aug WTi was $47.23. Once again I think the market is blatantly ignoring the facts in the same way that a best man ignores the fact he has a speech to write untuil the morning of a wedding. On the back of a soggy beer mat. Whilst they may seem like usual boring stats we all see every day those numbers speak for themselves. OPEC production has risen by around 10% but flat price has dropped close to a third. US production has risen by close to 50pct and flat price has dropped close to a third. Does anyone hear the US crying about cutting production to raise oil prices? The game is changing, and changing fast. All eyes on the USA for a while to come methinks. Good day.