Oil prices are on the rise into the holiday as a Nigerian oil worker’s strike and the ongoing problems with the Forties pipeline system lend support. We also have a successful launch of the CME Group’s Bitcoin future as well as a risk-on sentiment as it looks like tax reform will pass and soon be signed into law, just in time for Christmas. Just want I asked Santa for! No Coal this year!
The strike is coming at a bad time for Europe as they are already looking to replace oil that has been lost from the North Sea Forties pipeline, that is reducing supply by 450,000-barrels-per-day (bpd). The news drove Brent crude futures to just shy of $64 a barrel before pulling back. If the strike in Nigeria is a long one it could cause some big problems for Europe and could cause some shortages.
With the recent rise in oil prices and the big sell-off in natural gas you might be adding oil rigs and subtracting natural gas rigs. Yet, the opposite happened. Baker Hughes reported that oil rigs fell by 4 rigs, last week yet natural gas rigs increased by 3 rigs. The Fall in oil rigs was the first drop in 5 weeks and is putting the focus on rising costs for oil rigs. Shale oil production may be hampered by rising cost for oil service and fracking crews. With many trying to show fiscal responsibility that may lower output expectations.
BitCoin Mania continues as the CME group successfully launched its contract. After trading over 20,000 bitcoin prices pulled back. Still, many firms are still skeptical about trading the new contract. Still, it looks like BITCOIN is here to stay. There are still questions about the ability to track who owns the actually underlying bitcoins and the possibility they can fund some nefarious activities.