Oil commentary - 23 November 2017

Morning all. Brent closed last night at $63.32 up 0.75 and WTi closed up 1.19 to $58.02. To all our friends in the USA, Happy Thanksgiving. To all our Australian friends (colleagues excluded), COME ON ENGLAND!! Anywayyyyy, EIA data stoked some more buying interest in to the bulls and up up up we went. The bull march seems relentless and it wouldn't surprise me if some lunatic was to bid the market up to $70 on Brent before next week’s OPEC meeting. I read yesterday that "The saudi's are going for an extension of the cuts for another 9 months". Gee thanks Sherlock. Of course they are! In fact I'm pretty sure it's already agreed but headlines like this are required just to push flat price further up for even the most naive traders. Let me explain why I'm so sceptical about the extension of the cuts. I read a brilliant article yesterday - according to many experts across the pond, the US no longer needs military might to secure oil. They are not at the mercy of an OPEC oil embargo and the consumer in the US will never have to go through shortages at the pump like they did in 1973. The US will, without question of doubt, be the biggest oil producer in the world in the next 5 years. They are producing 4 times as much at half the cost than they were just 2 years ago. The investment in technology has meant that fracking allows even the smallest of Texan producers to explore an oil well not vertically, but horizontally, meaning more can be extracted, which in turn lowers costs. Shale oil in the US is only a decade old. JP Morgan predict that shale oil production will grow by 7mn bpd between now and 2025. 7 million! 7 million barrels per chuffing day!! That will take them to between 10 – 16mn bpd. 50pct more than anyone else globally. Now look, I don't care what will you have to cut production to "rebalance the market", the facts above can no longer be ignored. But the market is ignoring these facts. Ignore them yourselves at your peril. Good day.