Crude oil prices are playing the geopolitical gyration game. Events in Brazil, Iran, Saudi Arabia, Venezuela and the United States have oil prices and traders trying to price in risk in a rapidly changing political world. Calls for impeachments, changing political relationships, elections, OPEC meetings, the list goes on and on.
Investors have arrived in full force to exploit the opportunity to sell the euro at its highest level since November 2016, with the EUR/USD now appearing at risk to dropping back below 1.09 after briefly climbing above 1.10 when the markets opened for the week following confirmation of Macron becoming the new President of France.
Crude oil sold off in what has become an epic collapse and approaching the price area where shale output could be in trouble. After weeks of oil failing to see substantial draws in U.S. inventories, demand fears and technical pressures began to build.
Oil rig counts are rising but so are costs. Crude oil prices are modestly lower on weak Chinese PMI data and a rising rig count but the reality of the limitation of shale may start to become painfully obvious. While the number of active oil rigs increased for the 15th week in a row by 9 rigs, the cost of those wells increased by 7% between November and March according to the Bureau of Labor Statistics.
OPEC has shown unusual discipline in sticking to production cuts in the first half of 2017. We asked traders, will OPEC extend cuts beyond June in the face of increases in U.S. shale production and what would that mean for price.