Oil commentary - 19 September 2019

Morning all. Brent closed last night at $63.60 down 0.95 and WTi closed down 1.23 to settle at $58.11. Since the events at the weekend on the Aramco crude units, which if I'm honest were probably some of the most bullish headlines I have ever seen in a nigh on 20 year career, crude has rallied 15% and since then has dropped by about 8%. I'll say this - I don't get it. In no way am I questioning what the Saudi oil minister said - far from it, and I commend those working round the clock to ensure disruptions remain at a minimum, but even Challenge Anneka would fail this particular task, (what a great show that was btw). Full production returning in a matter of weeks? I mean we will have to wait and see over the course of the new few weeks I guess but for now, the market is pacified, and it seems like business as normal. EIA data was another disappointment for the bulls this week with crude and product stocks reporting builds. The Fed cut rates last night in a much-anticipated move. But all this news just seems to be passing by, lost in time, like tears in rain as Rutger Hauer would say. The market remains tense, not on a knife edge, but tense at least, maybe on a butter knife edge. As I mentioned yesterday there is more than enough people willing to step in and replace the lost Saudi production, if indeed there is any, and the market is now acutely aware of this, even with the attacks at the weekend. The question remains - What will truly be the catalyst of a sustained rally up to the now quite frankly absurd levels of $100 oil? A rhetorical question perhaps but one I am sure the bulls are mulling over daily. In my opinion it really boils down to one thing - the US oil boom. I don't even know if we can call it a boom any more as the outlook for US oil policy looks to be on an upward trajectory for at least the next 15-20 years. However, if doubt is placed in JR Ewing's mind about the sustainability of his latest Permian adventure then the bulls may really see a reason for Brent to break out of this $60-$70 range, cos nothing else is going to. Good day.