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WTI falls through last week’s low

  
Analysis, Crude

WTI down $1.53 to $63.05

WTI down $1.53 to $63.05
Oil has fallen through last week’s low in the fifth consecutive day of declines.
Oil is now chewing into the OPEC pop and consolidating in the $60-67 range. The next big test will be the uptrend since $33.64 on the eve of the US election.
It’s run a long way on the reopening trade and it’s clear that OPEC+ isn’t playing around on tightening inventories. The Texas storm has skewed some of that and Europe looks like it will be slower-than-hoped to reopen so some strength is coming out.
I’m very bullish on crude though. Demand will come back to 2019 levels next year but production won’t. Investment in oil is falling and companies have been consistent in saying they’re not going to grow.
There’s also a good chance that demand is stronger than expected this year on the reopening given sensational car sales in the past year.

IEA says that a new oil ‘supercycle’ seems unlikely

  
Analysis, Crude

IEA comments in its latest report on the oil market

  • There is more than enough oil to keep the market adequately supplied
  • Oil inventories still look ample compared with historical levels
  • A hefty amount of spare production capacity has built up due to OPEC+ curbs
  • Global oil demand won’t hit pre-virus levels until 2023

That is a bit of a wet blanket on the whole bullish rhetoric on oil that the market has built up in recent weeks. I’d keep this in view but the market will decide what it wants to as it sticks to the whole reflation narrative, so there’s that to consider as well.

IEAIEA forecasts show global oil demand to slow after a burst this year

BoA oil forecasts – expect global demand to bounce, and then just keep on growing

  
Analysis, Crude

Oil analysts at Bank of America are forecasting Brent and WTI to average $63/bbl and $60/bbl (respectively) this year (calendar year 2021).

Our supply and demand forecasts suggest a 1.3mn b/d deficit in 2021
  • followed by a 170k b/d surplus in 2022 
DEMAND forecast from BoA:
global demand will rebound nearly 6mn b/d YoY in 2021 after falling 8.7mn b/d in 2020. 
  • During 2021-23, we forecast demand will grow by more than 9mn b/d, the fastest pace since the 1970s.
SUPPLY forecasts from the analysts also:
Non-OPEC supply should grow more than 1 mn b/d YoY in 2021 and an additional 2mn b/d in 2022. 
  • US supply to grow less than 200k b/d in 2021 and more than 1 mn b/d in 2022 thanks in part to robust NGL volumes. 
  • OPEC supplies are set to rise 800k b/d in 2021 and 2.1 mn b/d in 2022 and OPEC+ adds back supply and as Iran returns. 
Oil analysts at Bank of America are forecasting Brent and WTI to average $63/bbl and $60/bbl (respectively) this year (calendar year 2021). 

EIA sees US crude oil production rising to 12 mbpd in 2022

  
Analysis, Crude

The latest forecasts from the US Energy Information Administration

The latest forecasts from the US Energy Information Administration
The EIA sees US crude production at 12.02 mbpd in 2022 compared to its forecast of 11.53 mbpd a month ago. That’s a reaction to higher prices.
This year’s production is less-sensitive at 11.15 mbpd vs 11.02 mbpd previously.
On the comsumption side, EIA forecasts that global consumption of petroleum and liquid fuels will average 97.5 million b/d for all of 2021 (-60k bpd), which is up by 5.3 million b/d from 2020. EIA forecasts that consumption will increase by another 3.8 million b/d in 2022 to average 101.3 million b/d (+330k bpd).
WTI crude is down 91-cents to $64.16 today.

Oil traders note – Saudi oil export ports, facilities targeted in attacks Sunday

  
Analysis, Crude

Saudi Arabia says ports and other facilities have been targeted by drones and missile strikes but has assured that damage is minimal.

A spokesman at the Ministry of Energy said
  • that one of the petroleum tank farms at the Ras Tanura Port in the Eastern Regio was attacked by a drone
  • another attempt was also made later to attack Saudi Aramco’s facilities
  • shrapnel from a ballistic missile fell near Saudi Aramco’s residential area in the city of Dhahran
  • said that both attacks did not result in any injury or loss of life or property
Other reports are that oil is still being loaded at Ras Tanura and a tanker has berthed at the facility after the earlier attacks.
Oil traders should be wary of a price pop on the news, although it does seem (according to the official reports at least) that there will be minimal, if any, disruption.
Saudi Arabia says ports and other facilities have been targeted by drones and missile strikes but has assured that damage is minimal.

WTI crude rises to highest since 2019 as it breaks $66

  
Analysis, Crude

Oil on an absolute sizzler

Oil on an absolute sizzler
Oil has turned into the best trade of the year as stocks (particularly tech) continue to struggle.
OPEC+ delivered an incredible boost to the market yesterday and the earlier timeline on vaccines is providing a one-two punch.
Today’s rally breaks the January 2020 high of $65.65. That came after the US assassinated Iranian general Qasem Soleimani and Iran retaliated by launching rocket attacks at US bases in Iraq.
The next resistance level is the 2019 high of $60.60. Crude might be overdue for a pullback but if the market is tight, there’s nothing to trigger it. Oil is also so hated that spec positioning isn’t particularly long. In short, this is such a hated trade that I think it can continue to run if $60.60 breaks. In Brent, the 2019 high is way up at $76 so there’s more room to run there (spot at $69).
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