Archives of “Crude” category

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Saudi oil minister: I feel good about the OPEC meeting

  
Analysis, Crude

Comments by Saudi Arabia oil minister, King Salman bin Abdulaziz

There have been whispers that he is pushing really hard to try and get other OPEC members on board with the idea of deeper output cuts. That said, it remains to be seen if Russia – a key stumbling block in the plans – will agree to such a proposal.

I’m not sure if we can read anything into the headline comment but there haven’t been much leaks about what to expect in the first few hours.

WTI crude oil futures settle at $58.43

  
Analysis, Crude
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Plus $2.33 or 4.1%

The price of WTI crude oil futures are settling at $58.43. That is a gain of $2.33 or 4.1%. The move higher today was helped by a bigger than expected drawdown of inventories of -4856K versus -1500K estimate.  News that Saudi Arabia is is threatening to keep production higher to punish producers who don’t keep to their quotas had little impact.
Plus $2.33 or 4.1%
Looking at the 60 minute chart above, the contract spiked above its 100 hour and 200 hour moving averages (blue and green lines) and extended up to the recent highs over the last 9 or so trading days between $58.67 and $58.74. The high price today reached $58.66. The low for the day was down at $56.28.
A move above this ceiling would be more bullish for the contract. Staying below, and we could see a rotation back down toward the 200 hour moving average of $57.46.

OPEC expects the oil market to be balanced in 2020 if it maintains current production levels

  
Analysis, Crude
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This according to data presented in Vienna to the bloc’s Economic Commission Board this week

OPEC

According to delegates, it shows that an oil supply surplus in 1H 2020 will be mostly offset by a deficit in 2H 2020. As such, the bloc sees that the oil market will be balanced next year and that puts them on course to stick with the current set of output cuts.

Do be reminded that OPEC will be meeting next week to finalise their decision but the expectation is for them to maintain the existing output cuts (due to expiry in March 2020) into the latter stages of next year.
The report by Bloomberg above only serves to reaffirm that notion with a mention that the bloc’s secretariat did not examine the prospect of deeper cuts.

OPEC mulls extending production cuts for 3-6 months

  
Analysis, Crude

Tass report

The OPEC meeting is on December 5 and earlier in the month there was talk of deeper cuts but that was always a low likelihood and Russia poured cold water on the idea. The aim will be getting to 100% compliance in the countries that are producing above quota.
This report gives a good baseline for what’s expected with 3 months seen as a a modest disappointment and 6 months mildly positive. The much-more interesting story in oil in 2020 will be shale production
Here is the oil chart:
Tass report

US production levels to cap oil prices in near term

  
Analysis, Crude

Via Bloomberg

Via Bloomberg Bloomberg out with a piece citing that high US production levels are due to keep prices in check. The drilled- but- uncompleted (DUC) wells count had fallen for a fifth month in October as producers draw on the the DUC’s inventory to cut costs and capital outflows. This is how US crude production managed to hit a record high this month even as the rig count fell to its lowest level since March 2017. See chart below:
Via Bloomberg

The rationale is that the ‘drilled-but-uncompleted’ wells cost less to complete than digging a brand new well. So, as US producers complete the DUC backlog it means more supply comes live and this will keep prices capped as producers work through the DUC inventory backlog.

Crude oil trades at the highest level in nearly 2 months

  
Analysis, Crude

Highest level since September 24

The price of crude oil futures has moved up to a new session high at $58.28 and in the process is trading at the highest level since September 24 nearly 2 months ago.

Highest level since September 24_

The move today took the price above its November high at $58.09. Recall that the price of crude oil traded above and below its 200 day moving average at $57.39 for 11 consecutive days.
On Tuesday, the price tumbled lower falling below its 100 day moving average (and closing below that level).   The move lower was helped by a much higher than expected API oil inventory data.
However yesterday, the inventory data from the DOE showed not nearly as strong a build, and the squeeze higher was on.
The price action today tried to stay below the 200 day moving average earlier in the session, but that level gave way, leading to increase momentum to the upside.  Bullish.
Should momentum continue (stay above the 200 day MA), the 61.8% retracement of the move down from the September high comes in at $58.65. Get above that level and there is more room for further upside with the natural resistance level at $60 looming as a target to the upside.
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