Rex Tillerson out as secretary of state, inflation is stable and OPEC cuts will remain in place, a bullish American Petroleum Institute report... Crude oil prices had some wild swings yesterday as the market whipsawed from one headline to the other. Oil was modestly higher but plunged after a report that Iran was thinking to raise output to pay off some Chinese investors.
March madness started early in crude oil as prices fell on relatively light volume and focused on bearish news about ignoring bullish news at its own peril. Traders sold oil off on a report that showed an increase in supply in Cushing, Okla., but it is about time. The Nymex Storage hub has seen supply fall at a record pace in recent weeks, and seeing that we are deep into refinery maintenance we should start to see the supply recover.
Shale predictions and price predictions, sometimes they just do not get it. According to an article in today's Financial Times, OPEC is shocked by how many hedge funds really have no clue about how the oil market works. OPEC’s Secretary General Mohammad Barkindo, who met with hedge fund managers, seemed shocked that many of them had no "basic understanding" of oil and were less savvy than was widely assumed.
Crude oil prices are getting rattled as the fear that rising interest rates will slow down surging U.S. and global demand. High-yielding auctions and Fed minutes, that stated the obvious, was enough to send stocks and oil and the 10-year Note on a wild ride. At first, the market took the Fed's promise of gradual rate increases as a positive but later deemed that the Fed was still hawkish. Yet, the real surprise is that the market is surprised that the Fed can read economic data.
WTI crude oil prices are gaining on Brent as strong U.S. demand and Canadian pipeline issues tighten U.S. oil supply even further. This comes as OPEC comments suggest that they are still fully committed to keeping production cuts in place until the end of 2018, along with their non-OPEC coconspirators and even suggesting that the deal could go on longer if need be.
Crude oil prices are soaring back after getting smashed on last week’s stock market correction. Of course, all the selling in stocks and oil are not about what is happening now but what may or may not happen in the future.
The Energy Information Administration (EIA) released another EIA Drilling Activity report that raised its estimates for shale oil production without considering the realities on the ground. According to the report, the EIA says that U.S. shale oil production will increase by 111,000 barrels a day to 6.55 million barrels a day in February next month, and that production in the Permian Basin will surge by 76,000 barrels a day.
Crude oil prices traded at the highest level since OPEC declared a production war on Shale and laughed off an estimate of record U.S. oil production from the Energy Information Administration. The reason why the oil bears got it wrong was that they underestimated demand and overestimated production.
We now have more evidence that the oil supercycle is underway, crude prices are on the rise as global demand and underinvestment in new oil projects are starting to take their toll on global oil supply.
Welcome to leap year 2018! Ok, I know what you are thinking, you have not heard that it's a leap year. Well, 2018 is not a traditional leap year, but it will be a leap year for crude. Oil struggled this year as the market failed to be convinced that the combination of OPEC and Non-OPEC production cuts and strong global demand could reduce global supply.