Commodity Trade Mantra

Posts Tagged ‘Brent’

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.

Crude Oil At $20 Is Now A Distinct Possibility As Chinese Demand Wanes

Importantly for crude oil is the fact that China’s worsening economic situation could cut into the country’s crude oil demand. As the world’s principle driver of crude oil demand suddenly starts slowing to more pedestrian levels of growth, the oil markets are very much feeling the effect. As Goldman Sachs predicted, crude oil prices might indeed fall to $20s per barrel.

When Will The Oil Prices Turn Around?

Pessimism increased about oil prices last week as second quarter earnings for U.S. E&P companies were released. Many tight oil producers announced higher production guidance for 2015. OPEC is producing more than half of the world production surplus and has the capacity to cut production by the entire amount of the surplus, but will not until its goals are achieved.

Oil Price Recovery May Be Too Much Too Soon

The rise in oil prices over the last few weeks has been so rapid that few predicted it. Speculators have raised their bullish bets to the highest level in years. The optimism may not be justified. In the past, bets to such a degree have often been followed by a fallback in prices. Oil inventories are still at 80 year highs.

Could We Finally Have A Meaningful Oil Price Rally?

There are a few reasons for the newfound bullishness in oil prices. First, rig count declines are starting to slow. Second, a likelihood that production has also flattened and is approaching a decline. Another reason for the oil price surge was due to the markets shaking off concern that Iranian crude will suddenly flood the market.

North American Crude Oil Production Remains Strong

A massive build-up of crude oil inventories is seen in the US, to levels never seen in recent history. The International Energy Agency has even warned that the US will run out of storage soon. Why do producers continue to pump at low prices? It seems that at that point someone will have to finally stop pumping crude oil out of the ground.

US May Run Out Of Oil Storage Space As Soon As June

Crude oil inventory data shows that total utilization of crude oil storage capacity in the US stands at approximately 60%, compared with 48% at the same time last year. Oil prices would need to fall even farther for the the floating storage play to be economically viable as the cost of remaining storage goes through the roof.

Venezuela Begins Liquidating Its Gold

Venezuela’s primary export is oil, that has been slammed in recent months on tumbling oil prices. Venezuela faces a cash crunch following maturity of a 1 billion euro bond this month & coupon payments of $700 million in April. Its central bank is in talks with Wall Street banks to create a gold swap in exchange for $1.5 billion cash.

Why Citi Thinks Oil Is Going To $20

Citi warns the oil market should bottom sometime between the end of Q1 and beginning of Q2 at a significantly lower price level in the $40 range (perhaps as low as the $20 range for a while) – after which markets should start to balance, first with an end to inventory builds and later on with a period of sustained inventory draws.

The Oil Pricing Mystery Has Been Solved

Plan for oil prices to stay lower for longer than you think. As with most busts, there has to be a washout phase filled with bankruptcies & lots of angst. We’re not there yet. Oil stocks are way down – But I expect we’ll see a significant oil company or two go under. The bust will take some time to play out — not weeks or months, but probably years.

Brent Plunge To $60 If OPEC Fails To Cut, "Profit Recession" To Follow

If OPEC fails to agree a cut, prices will drop “further and quite quickly”, with U.S. crude oil possibly sliding to $60. If Brent does indeed tumble to $60, what happens? Then the most likely next outcome is a Profit recession, which while left unsaid, will almost certainly assure a full-blown, economic one as well.

Why the Rising Tide in Oil Hasn’t Been as Good for Offshore Ventures

Thanks to additional new U.S. pipeline capacity and the growing volume of oil product exports from American refineries, the glut of excess storage at Cushing is shrinking. With crude oil prices continuing to rise, you would think that’s good news for both onshore and offshore drilling ventures.

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