Commodity Trade Mantra

Posts Tagged ‘Oil Production’

Is Putin’s Support For An OPEC Freeze A Game Changer for Crude?

The array of comments from OPEC and Russian officials over the past week could signal that a real effort might be underway to reach a deal on freezing production. Iraq would support a deal; Iran will attend the meeting & the potential for an OPEC deal received an endorsement from a surprising source – Russian President Vladimir Putin threw his weight behind a production freeze.

The True Value of Gold (Economic Code) Finally Revealed

The true value of gold is much higher than the spot price quoted in the market. This is due to several factors, but the most important reason is misunderstood by just about every economist and monetary scientist in the world today. Those who are able to understand the information in this article, will finally be able see the value of gold (money) in a totally different way.

Oil Prices Hint Bear Market As Short Positions Surge To 10 Year High

The latest CFTC data show that speculators increased their shorts (bearish bets) by the biggest volume on record in last week’s data for WTI crude oil. Saudi Arabia has cut its official selling price (OSP) for Arab Light into Asia for September by the biggest amount in nearly a year. The price discount is a response to lower impending Asian oil demand as refiners dial back on runs.

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.

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.

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.

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.

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.

Oil Markets Increasingly Bullish As Long Positions Surge

The latest CFTC data show that short positions in WTI crude oil shrank again last week, dropping by 20% to the lowest level since June. In combination with a 2.4%t increase in long positions, net-longs increased by 17% – to the highest level since last June. Once again, this increase shows ‘much less bearish’ positioning, as opposed to ‘much more bullish’.

Have Oil Prices & Markets Grown Numb To Supply Disruptions?

The idea that there is a major glut in oil supplies has been overstated. Surpluses in the past have been higher & oil prices did not collapse. Oil price discovery is basically made in the highly leveraged oil futures market & speculators exaggerate oil price movements on the upside as well as the downside. Just as fast prices fell because of them in the futures market, they could drive prices up.

The Oil Price Ceiling Has Been Set: "Above $40 And We Start Pumping Again"

The cure for low oil prices is low oil prices & as more shale companies halt production, the 3 mmb/d oversupplied oil market will slowly return to equilibrium. The oil price war is about to enter its far more vicious, and far more lethal phase, and while it is unclear who ultimately wins, whether it is Shale or the Saudis, the loser is clear: anyone who bought into bets of an imminent oil bounce.

It's Correct that Oil Prices Will Rise — But Here is the Real Reason Why

Oil demand increased globally in 2015 to as high as 2.0 million barrels per day. EIA reports shale production to be declining by more than 100,000 barrels per day. Don’t be misled by the news about China imploding. To this point, it has not impacted oil demand, with imports hitting an all-time record of 7.8 million barrels per day in December.

How Oversupplied is the Oil Market Really?

My conclusion is that this market is only marginally oversupplied and represents approximately 1.5% of the global oil market. If the above assumptions prove accurate then we could very well see an oil market that is in equilibrium if not undersupplied by the end of 2016. My guess is the price of oil begins to move higher long before that moment actually occurs.

Stronger Dollar And OPEC Inaction Force Crude Oil Below $40

Looking at global offshore rigs, even though 40 out of 350 rigs have been taken out of the market in the price rout of the last year, we need to see up to 100 rigs go offline to halt the supply glut. The descent into disarray by OPEC has prompted WTI crude oil to plummet into thirty-dollardom; a strengthening dollar is only serving to strong-arm the crude oil complex lower.

Why "Supply & Demand" Doesn't Work For Oil Prices

The costs of producing oil continue to rise, as a result of diminishing returns, so this fall in oil prices is clearly a problem. Low oil prices make future production unprofitable; it also leads to an increasing number of debt defaults. It is also inevitable that the price of oil must stop rising at some point because of the adverse impact on spendable income of consumers.

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