Even in long-term bull markets, you are going to have a day like Wednesday. Crude oil and products crashed down to major support as it was hit with a confluence of headlines and bearish weekly Energy Information Administration data. Fears of the impact of sanctions on China, Iran, Russia and Turkey did not help and another big drop in U.S. gasoline demand has some worried that U.S. consumers were showing resistance to higher pump prices.
Crude oil prices had a tough time staying higher as trade war fears and distraction took the market focus off tightening global oil supply. While many are making ominous predictions of what this trade war may do to economic growth, the reality is that if we are overestimating these concerns the oil market is going to be woefully undersupplied.
Crude oil prices are under pressure after Present Donald Trump took away some of the growing optimism of a United States/Chinese trade deal, along with some non-sourced OPEC talk about raising oil production at their next June meeting and weaker than expected manufacturing data in Europe.
Come join the bull oil party. The room was empty a few years ago but now everybody is jumping on the dance floor. Crude oil is a boom and bust market. Two years ago, we went bust and since then we are in a boom shakalaka. Oil prices closed steady after giving up gains as the June option expiration pressured prices, only to have them stay strong based on the crude realities of strong global demand and tightening supply.
The International Energy Agency (IEA), or as I call them the “demand downers,” once again are raising concerns about global oil demand. The agency that has consistently underestimated global oil demand is once again trying to keep their weak demand illusions in the spotlight. A few years ago, it was because that despite the low price, demand would be bad despite clear evidence to the contrary.
Crude oil prices are pulling back from three-and-a-half-year highs after a leap in the U.S. oil rig count and a relatively calm weekend when it came to geopolitical tensions. Drillers added 10 oil rigs and 3 gas rigs bringing the total oil rig count to 844, the highest level since March 2015, according to Baker Hughes.
Crude oil prices are hovering just below a three-year high as many are still shocked that oil prices are again trading this high. Oil prices started out strong on Iranian-Israeli war tensions but pulled back after data from Genscape put crude storage at Cushing, Okla., at 39.56 million barrels as of Tuesday, up 479,644 barrels from Friday.
Crude oil prices are taking a step back on Monday as an increase in rig counts and a drop-in supply in Cushing, Okla., and a perceived drop in Geo-political risk premium are causing traders to take a step back. The U.S. oil rig count increased by five rigs last week, as U.S. producers are responding to higher prices and demand; but the real reason for weakness in oil may have been the fact that refinery maintenance is slowing the ravenous U. S. appetite for crude oil temporarily.
President Trump has said the Iran Nuclear deal was insane and ridiculous, yet that does not necessarily mean that he is going to back out of it. That possibility helped break oil from near a three-and-a-half-year high that had rallied, in part, on threats by Iranian President Hassan Rouhani, who warned of "severe consequences" if the Trump Administration "betrays the deal."
U.S. crude oil production is at a record high but supplies of oil keep falling. Did you stop to wonder why? Well, there are many reasons, such as record demand, but a larger issue has to do with shale oil. Yesterday’s oil initially rallied on a report that Saudi Arabia was raising crude prices for customers showing that they are confident about demand and not worried about losing market share.