Oil commentary - 22 September 2023

Morning all. Yes, for the eagle eyed among you there was a break in commentary yesterday, some technical difficulties. Hmm. BRENT! Yes, Brent, and WTI? Yep, sure. Brent is trading this morning at $93.83 up 0.53 and WTi is trading up 0.65 at $90.28. Hmm, so quite a dramatic week in oil markets then? Well, yes. Let’s recap it, shall we? Higher demand. Choked off supply (voluntarily, natch). Interest rates on hold. Lower inflation. Russia bans oil product exports. Traffic jams. And that pretty much sums up the week, doesn’t it? The result? Brent is down 0.53% on the week. Brent on the month however is up over 11%. So, I know what you’re all thinking - Why is it that our noses run, but our feet smell? Hmm, no not that, but actually that’s a very good point. No, what you are really thinking - will OPEC+ continue to choke off supply in the hope this keeps flat price above $90? I know I know I know, this sounds like a very obvious question to ask and you could probably read the Business section of the Daily Mail (does it have one?) and get better insights in to the world of commodities, but hear me out - if the voluntary production cuts were to be wound down to zero over the balance of the year, would the energy complex have any other choice but to adjust back down to around probably $80 per bbl? I think, no. Everything else right now i.e., interest rate decisions, inflation headlines, forward fiscal policy etc etc is nothing apart from noise in oil markets. It is all about supply being choked off that is keeping us up here and with more headlines like the ones Russia came out with yesterday regarding temporarily banning diesel and gasoline exports, the higher the fragile nature of the current oil market is revealed which only results in one thing. Higher prices. My colleagues have written some great articles on this subject over the last couple of days so reach out if you want more on this subject. Plugggggg. Have a great weekend.