IEA says oil demand won’t fully recover until at least 2022

IEA comments on the oil market in its latest report

  • Floating storage of crude oil in May fell by 6.4 mil barrels m/m to 165.8 mil barrels
  • Global oil supply fell by 11.8 mil bpd in May
  • Helped by OPEC+ countries reducing output by 9.4 mil bpd
  • Sees oil demand next year to rise by 5.7 mil bpd, but still lower than in 2019
  • Oil demand next year to remain 2.4 mil bpd below 2019 levels
On OPEC+, IEA says that they made a “strong start” and delivered 89% of its pledge to cut output but warns that rising prices could pose a problem:

“The market may present producers with an opportunity to ramp up more quickly than dictated by current OPEC+ policy, or US and other non-OPEC production could recover more strongly than forecast.”

With oil prices having moved up back close to $40, nobody – even US shale drillers – will want to miss out on the party.

Oil likes what it heard from OPEC, prices edge higher early

Crude starts the week higher

Crude starts the week higher
WTI crude rose as high as $39.90 shortly after the open. It’s since ticked a few cents lower to $39.83, which is up 25-cents on the day.
OPEC+ announced a one-month cut extension on the weekend but it wasn’t all good news as some Libyan production came back online.
Keep a close eye on the $40 with crude in the March gap. The bottom end of it is $41.05.

IEA says there is no feasible agreement that could cut oil supply by enough to offset demand losses

Comments by IEA chief, Fatih Birol

  • April may be seen as the worst month ever
  • We may look back and say that April will be known as ‘Black April’ in the oil market
The risk mood continues to sour further after the IEA report, with oil prices threatening a firm break below the $20 level now.
Price is flirting with a drop below the 30 March low at 19.27 and as mentioned earlier, the drop in oil may be enough to set off a further wave of risk aversion in the market.

US natural gas falls below $2 for the first time since 2016

Natural gas prices crater

Natural gas prices crater
Mild weather in the US and massive shale production in the US has led to an abundance of natural gas in the US. The aim is to one-day convert it into liquefied natural gas to export but with the wild overproduction in tight oil, there’s no way to liquefy it or transport it. Prices in and around production areas are much lower than $2.
A reckoning is coming to shale soon, and even sooner if crude falls below $50 this year.

WTI crude oil futures settle at $58.43

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.

Oil rallies to the highs of the week

WTI crude at the best levels since Friday

WTI crude at the best levels since Friday
There was a huge build in US oil supplies in data released today but the market has shaken it off. That’s a great sign for the bulls and it comes — in part — due to draws in products.
I think this could lead to some short-term upside but WTI needs to get above $56 to really make any headway.

Global growth worries continue to weigh on oil

This selloff is getting ugly

This selloff is getting ugly
WTI crude is now down nearly 4% on the day as gloom about the global economy sets in.
The big news this week was OPEC but they did as much as could have been reasonably expected by extending cuts for 9 months. This may be a sell-the-fact trade but it looks more like the market is jittery about demand.
The US Treasury market is sending the same worrisome signals today, despite the China-US truce.
One worry is that Trump’s administration announced fresh European tariffs yesterday. The amount of goods overall is small but it’s moving in the wrong direction and a US-Europe trade war would sink growth expectations once again.
The chart doesn’t look great as we top out well-ahead of the previous highs.

Visualizing How Plunging Oil Prices Affect Currencies.The world consumes 93 million barrels of oil, which is worth $4.2 billion


Every day, the world consumes 93 million barrels of oil, which is worth $4.2 billion.

Oil is one of the world’s most basic necessities. At least for now, all modern countries rely on oil and its derivatives as the backbone of their economies. However, the price of oil can have significant swings. These changes in price can have profound implications depending on whether an economy is a net importer or net exporter of crude.

Net exporters, countries that sell more oil abroad than they bring in, feel the sting when prices plunge. Less revenue gets generated, and this can impact everything from balancing the budget to the value of their currency in the world market. Continue reading »