Commodity Trade Mantra

All posts under ‘Crude Oil Trading’

Why Any Major Crash in Oil Prices Remains Unlikely

At oil prices below $40 a barrel, virtually no new drilling occurs. As a result, oil prices today may be artificially boosted by market speculation, but as long as they don’t go high enough to lead to significant new drilling, fundamentals will eventually catch up and production will fall dramatically. That in turn will support current oil prices and perhaps even higher prices in the future.

Oil Prices can Spike on $1 Trillion In Spending Cuts

An oil supply deficit may be hard to fathom given two years of surplus and rock bottom oil prices, but with the financials of so many oil companies badly damaged, upstream investment could come up short in the not-too-distant future, even if oil prices continue to rise this year. The small increase in the US oil rig count over the past few weeks is not nearly enough to reverse the decline.

Brace for a Correction in Gold, Crude Oil Prices on Pre-Positioning for FOMC

Souring sentiment may reflect pre-positioning ahead of next week’s potent news-flow – notably, the FOMC rate decision – with traders using a lull in high-profile event risk to book profits & move toward a more neutral posture. A broadly corrective tone may also bode ill for gold prices after the metal hit the highest level in three weeks. Crude oil prices & the S&P 500 too have declined.

India's Soaring Oil Demand Provides Floor Beneath Oil Prices

India’s oil demand grew by 400,000 barrels per day in the first quarter – the fastest in the world, accounting for about 30% of the total global increase. Crude oil imports have jumped by 12% so far this year from 2015 levels. India’s oil demand could rise to 10 mb/d, a more than 6 mb/d increase from today’s levels, which will also be the largest source of growth on the planet.

Why We Need Oil Prices to Rise to $120 Per Barrel or More

When oil prices fall from $100 per barrel to $50, the incomes of a large share of people are adversely affected. This drop in income tends to radiate outward to the rest of the economy because each worker who is laid off is forced to purchase fewer discretionary items & is also less able to take on new debt, such as to buy a new car or house.

With A Rebound In Oil Prices, Will Drilling Activity Return?

On June 6, Morgan Stanley released a report saying that “all eyes” are on the U.S. to see if drilling will return now that oil prices are back above $50, after having rallied roughly 85% since February. There are a few early signs that drilling is starting to begin again. The oil rig count jumped by nine last week to 325 active oil rigs, the sharpest increase since December 2015.

Saudi Market Share Hit As Russia Doubles Oil Exports To China

Russia had overtaken Saudi Arabia as China’s leading supplier of crude oil at the end of last year. Russia’s exports to China had more than doubled over the course of the past years — an increase equivalent to 550,000 barrels a day, while the two major oil suppliers – Saudi Arabia and Iran, saw their Chinese oil orders decline year-over-year.

Here's Why Crude Oil Prices Could Keep Climbing

Stocks took a beating yesterday. But crude oil continues to push to new 2016 highs, topping $48 for the first time in nearly five months. No one is cheering as it sneaks higher week after week. Where were these oil bears when crude was trading north of $100 in early 2014? And more importantly—where are the crude oil bulls right now as this disbelief rally continues?

Falling Chinese Demand Could Intensify The Crude Oil War

For exporters of commodities & industrial materials, the shrinking of the world’s largest source of demand is bad news. Nowhere is this more evident than in the Chinese energy sector, as crude oil accounts for 6% of total imports. China’s economic slowdown, combined with a global push towards renewable energy, could threaten the already fragile levels of its crude oil demand.

Iran Offers Discounts On Asian Crude Oil, Hits Saudi Where It Hurts Most

Iran has introduced a discount on the June contract for its heavy crude oil going to Asia, just after Saudi Arabia announced a price increase for its own June contract for the continent. With the discount, Iranian crude oil will be noticeably cheaper for Asian clients than both Saudi and Iraqi crude. Saudi Arabia and Iran are playing a game of barrels & Asia is the ultimate prize.

Crude Oil Prices Spike After EIA Reports Surprise Draw

The EIA sees non-OPEC production dropping 0.7 million bpd this year, while it sees OPEC production up 0.9 million bpd this year & up an additional 0.7 million bpd in 2017 (h/t Iran). It now pegs crude oil demand growth at 1.4 million bpd for this year (up 0.3 million bpd from last month), with the increase in large part due to higher Chinese and Indian demand.

Here's What Saudi Arabia’s New Oil Policy Will Look Like

Ali al-Naimi’s termination & Prince Mohammed’s official ascent to the top of the Saudi oil chain of command are likely bearish in the short term, as Saudi Arabia reverts to its 2014 strategy of pushing oil prices low enough to put marginal producers out of business. What does this mean for oil, since Khalid Al-Falih is likely to follow Naimi’s policy of safeguarding Saudi Arabia’s market share?

Do Not Underestimate The Power Of This Year's Rally In Oil Prices

Oil futures are currently around $49, v/s $65 seen in the Q2 of 2015. If the futures market doesn’t expect the oil prices to rise, producers can’t lock in a profit like they might have at $65. If you can’t lock in a profit, you can’t produce as much & thus supply should theoretically fall. This has led us to say the futures price is far more important than the current or spot price.

Can Crude Oil Prices Continue To Rally Like This?

Oil prices have bounced around a bit after last week but have held more or less in the range of $43 per barrel for WTI and $45 for Brent. The price gains over the past few weeks come as the fundamentals have improved. Oil production is expected to continue to fall through 2017 as too few new wells come online to replace rapidly falling shale output.

Has the Oil Price Rally Gone Too Far? Time for a Correction or Yet More to Rise?

As usual, the oil markets are rife with confusion and uncertainty. Speculators could be overextending themselves – Or – realize that the rally has run out of steam & then decide to pocket their profits. The longer-term looks a little clearer on the back of rising demand and shrinking supply. The market will have to balance out; the only debate is over how quickly that happens.

Oil Prices Rise Despite Threat of Potential Supplies

Oil prices are expanding their rally despite the failure of the Doha meeting. Traders are now concentrating on the declining North American production. US producers have lost their potential of investing in growth opportunities amid a decline in crude oil prices from $120 to below $30 a barrel. Oil supplies from Canada, US & Latin America could decline by 700,000 barrels per day this year.

Doha Is Done, Saudi Prince Says - No Oil Deal Without Iran

In what appears to be a Doha party-pooping statement, Saudi deputy crown prince Mohammed bin Salman stated unequivocally that The Kingdom won’t restrain its oil production unless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha. If there is no agreement, then expect a sharp oil market sell-off on Monday.

How to Play the End of the Biggest Oil Bear Market Ever

It’s been a long time since oil has had this much pep in its step. And it’s lifting the rest of the market higher too. Yesterday’s close above its 200-day moving average is crude oil’s first since July 2014. Is the longest downtrend for oil in history is finally through? It’s possible. The road higher will be messy and difficult. But some quality trades should materialize soon enough.

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