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Showing posts from October, 2018

Oil Prices Buoyed By Draws In Gasoline, Distillate Inventories

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With the snap-back of U.S. sanctions against Iran just days away, oil markets continue to be jittery, yet prices seem to be rather oblivious to inventory reports from the United States. The EIA’s latest report, is unlikely to change that. The authority reported a build of 3.2 million barrels for the week to October 26th, a day after the API estimated inventories had risen by a hefty 5.69 million barrels, which failed to move prices down.Last week, the EIA reported an inventory build of over 6 million barrels, with gasoline and distillate fuel inventories down by 4.8 million and 2.3 million barrels, respectively. In the week to October 26th, gasoline inventories were down by 3.2 million barrels, while distillate fuel inventories were down by 4.1 million barrels.Gasoline production last week averaged 10.4 million bpd, up from 10 million bpd a week earlier. Distillate fuel output stood at 5 million bpd, unchanged on the week.Despite the positive effect on prices of the Iran sanctions and…

US Oil To Significantly Outperform This Year

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On the morning of publication of the EIA-914 and EIA PSM reports today (October 31), providing US monthly oil production data for August 2018, Rystad Energy analysis indicates that the market should expect significant outperformance of US oil production compared to the EIA’s predictions.The EIA’s current Short-Term Energy Outlook (STEO) suggests total US oil production growth of 90,000 bpd from July to August 2018 with nationwide oil production averaging 11.05 million bpd in August 2018. According to the EIA, 80,000 bpd of this growth should come from Alaska, whereas the predicted decline in production from the Gulf of Mexico nearly offsets the projected increase from the Lower 48 states excluding the Gulf of Mexico.However, actual well production data and daily throughout figures from the TAPS pipeline suggests that this projection for Alaska is in fact too optimistic, with August 2018 oil production averaging 428,000 bpd, about 40,000 bpd below the EIA’s expectations. Nevertheless, …

Will Iran's Oil Exports Fall To Zero?

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The deadline for implementation of U.S. sanctions on Iran is just days away, and the Trump administration is having second thoughts about how hard to press the Islamic Republic.More accurately, there seems to be disagreement from within the Trump administration. According to the Wall Street Journal, Secretary of Treasury Steven Mnuchin is leaning towards a more cautious approach, which would mean refraining from punishing the European Union for its efforts at keeping business ties alive with Tehran.One of the key issues is the use of Swift, a financial-messaging service that is critical to global finance. Swift helps process international financial payments, and the cooperation of Swift during the prior round of Iran sanctions between 2012 and 2016 was critical in isolating Tehran.This time around, Europe is resisting the U.S.’ “maximum pressure” campaign. The EU is forbidding European companies from complying with U.S. sanctions, although the measure is mostly toothless.Nevertheless,…

High Oil Prices Are Already Destroying Demand

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Crude oil prices have gone up high enough to begin hurting demand for the commodity, the chief of the International Energy Agency, Fatih Birol, said as quoted by Reuters on the sidelines of an industry event in Singapore.Birol noted the adverse effect of higher oil prices on large emerging economies in particular, including India and Indonesia, saying, “Many countries’ current account deficits have been affected by high oil prices.”The negative effect has been compounded by a slide in local currencies as well, a development that can also be at least partially traced back to higher oil prices and their effect on current account deficits.The good news, at least for consumer nations, is that this situation cannot continue indefinitely and with dampened demand prices should go down as well at some point.“There are two downward pressures on global oil demand growth,” Birol told Reuters. “One is high oil prices, and in many countries they’re directly related to consumer prices. The second o…

OPEC's Radical Strategy Change After The Midterms

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Oil markets could be heading for a possible showdown this week, as U.S. sanctions on Iran will be implemented fully, OPEC+ producers have opened the valves and the global economy is showing some cracks.In the meantime, reports are emerging that a possible oil glut is again on the horizon, as demand growth could be fledgling. These possible doomsday scenarios are again showing a possible herd-mentality in the press. Even that the so-called OPEC+ production cut agreement has been very successful lately and global oil storage volumes were on their way down, the market is envisaging a possible new tsunami of oil flooding the markets.However, several main issues could ease the bearish impact of this news in the next two weeks. The effects of the Iran sanctions may already be fully priced in, but looking at the current market situation, most of this could be distorted. Not only is OPEC+ sticking to its official compliance rates, producing enough crude to supply the current demand, but Iran …

Oilfield Service Companies May Struggle To Pay Debt

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The oilfield service sector has been on the path of recovery from the 2014 industry downturn, but just when the industry says things are starting to look up, Moody’s has begged to differ. In a recent announcement, the credit ratings agency said that U.S. oilfield services providers will find it hard to pay down their debt over the long term unless they boost their cash positions in the short term."US oilfield services and drilling companies' high debt levels will continue to constrain their credit quality in 2019 and beyond," a senior Moody’s analyst said. "The largest firms are significantly better positioned to regain their credit strength next year than the smaller ones, though the threat of balance sheet restructuring will persist, particularly for the latter," Sreedhar Kona added.The latter part of this statement is unsurprising: big players are invariably better positioned to weather the fallout from a price crisis than smaller rivals. Yet the reminder ab…

Petrobras Puts Brakes On Chevron Drilling Plan

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Brazil’s state energy giant Petrobras has decided not to go through with a drilling plan at a field operated by Chevron, effectively ruining the supermajor’s plans for the field, Reuters reports, citing unnamed sources familiar with the matter.Chevron has a 52-percent stake in the Frade field and Petrobras has 30 percent, but for the Brazilian company, this field is not a priority, the source said. The priority is the pre-salt zone, which is seen as the biggest production growth area in Brazilian oil.Petrobras, in fact, is so disinterested in the Frade field that it might sell its stake in it. Earlier this week, a private Brazilian energy company, Petro Rio, bought 12 percent in the Frade field from another firm, Frade Japao, and its chief executive told Reuters it could also buy Petrobras’ stake in the field.“We see extending the life of the field as a positive, drilling new wells,” Nelson Queiroz said. Earlier, Petrobras had planned to drill six new wells at the field, worth some US…

Cold Snap Could Send Natural Gas To $5

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The natural gas market is looking rather tight, even as U.S. production continues to set new records.Inventories fell sharply last winter, leaving the country a little light on stocks heading into injection season. That did not concern the market much, with record-setting production expected to replenish depleted inventories.However, the past six months has not led to surging stockpiles, and inventories replenished at a much slower rate than expected. We are about to enter the winter heating season with inventories at their lowest level in 15 years. For the week ending on October 19, the U.S. held 3,095 billion cubic feet (bcf) of natural gas in storage, or 606 bcf lower than at this point last year, and 624 bcf below the five-year average.(Click to enlarge)The reason for this is multifaceted, with seasonal weather playing a role, but also structural increases in demand. “Hot summer weather, LNG liquefaction demand, exports to Mexico, and the industrial sector have all mitigated the i…

Rallying Oil Prices Send Eurozone Inflation To Six-Year High

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Rising oil and energy prices sent the inflation in the euro zone to the highest in nearly six years in October, a flash estimate from Eurostat, the statistical office of the European Union (EU), showed on Wednesday.Annual inflation in the 19 EU member states using the euro currency is expected to be at 2.2 percent in October, up from 2.1 percent annual inflation in September, with annual prices of energy soaring more than 10 percent, Eurostat said. The annual inflation rate in the euro area in October is the highest since December 2012.Looking at the main components of euro area inflation, energy is expected to have the highest annual rate this month, at 10.6 percent, compared with 9.5 percent in the previous month, followed by food, alcohol and tobacco, services, and non-energy industrial goods, Eurostat said.The core inflation in the euro area—that is excluding energy, food, alcohol, and tobacco—is estimated at 1.1 percent in October, up from 0.9 percent in September.Rising energy p…

World's Cheapest Natural Gas Market Could Be Facing A Shortage

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A natural gas shortage in Canada is expected to last through the winter months, forcing gas users ranging from industrial forces to local governments to seek alternative fuel sources and strategies for slashing consumption and conserving the gas they have. The shortage stems from this month’s pipeline explosion near Prince George, British Columbia.In the aftermath of the explosion, FortisBC, one of British Columbia's largest utilities, says that their supply of natural gas will be reduced by a whopping 50 to 80 percent throughout the coldest months of the year. This sudden squeeze will necessitate a lot of unforeseen expenditures on alternative fuel sources. This is a cost that will be passed directly onto consumers, affecting everything from the price of gas and heating to even the price of vegetables, among other subsequent price hikes.Natural gas has service has already been restored to the province in the wake of the October 9th disaster, and pipeline owner Enbridge says that …

Trading Outlook for Gold Price, Crude Oil, Dow Jones, DAX 30 & More

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Gold coming off resistance quickly has price support in focus, but looks more likely to head towards the next level (line in this case) of support. The drop in crude oil may be over soon, but a rally looks likley to prove only corrective in what looks to be a broader move lower. The Dow Jones has been holding up better than the SPX and NDX, and so far is holding trend support from 2016. The DAX 30 is caught between a break of the long-term head-and-shoulders pattern and significant trend support.Technical Highlights:Gold has a couple of support areas to watchCrude oil may find some buyers, bounce not expected to lastDow Jones holding longer-term trend support for nowDAX 30 caught between two strong levelsSee how the majority of traders are positioned in various markets/currencies and what it says about future price fluctuations –IG Client SentimentGold has a couple of support areas to watchGold’s turn down from the 1240 area has support in focus around 1214/10, the top part of the ran…

Eurozone inflation near 6-year high as oil price spikes

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However, with oil prices having come off near four-year highs in recent weeks and with economic growth faltering, there is a strong chance that inflation may have peaked. And that could limit expectations of the European Central Bank joining its peers, like the Federal Reserve and Bank of England, in starting to raise interest rates next summer.

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Oil prices set for biggest monthly decline since 2016 on growth fears

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Futures in New York are poised for a 9.3 percent drop this month, ending two months of gains. Photo: Reuters Seoul: Oil’s on track for its worst month since 2016 as the specter of a slowing global economy haunts the market that’s grappling with growing U.S. inventories and mixed signals from producers. Futures in New York are poised for a 9.3 percent drop this month, ending two months of gains. Prices have slipped from a four-year high this month as concerns that American sanctions on Iran would squeeze supply were overshadowed by a rout in global equities and an escalating trade dispute between the U.S. and China.Oil has lost more than 10 percent after breaching $76 a barrel earlier this month. With U.S. sanctions against the Persian Gulf state taking effect later this week, investors are assessing different output signals from Organization and Petroleum Exporting Countries and its allies. Saudi Arabia, which is under scrutiny over the killing of journalist Jamal Khashoggi, has said t…

MARKETS LIVE: Q2 results, rupee, oil prices likely to impact sentiments

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Nifty outlook by Prabhudas Lilladher Nifty has made a good recovery from the bottom made at 10000 levels to bounce and rise up to almost 10400 levels, however, the upward movement conviction can be maintained only a close above 10500-10550 levels and as for Bank Nifty, a breach of the level of 25900 would be crucial for further development. However, the support for the day is seen at 34150/10300 while resistance is seen at 34720/10450. Bank Nifty would have a range of 24850-25430. Markets rally as rift between RBI, govt eases; global cues aid sentiment Stocks rallied on Wednesday after the government moved to ease concerns over the independence of the Reserve Bank of India (RBI). Buzz that the government was mulling fresh steps to ease liquidity concerns triggered gains in the shares of non-banking financial companies (NBFCs) and banks. Also, positive global cues, following sharp overnight gains in the US markets, aided sentiment. READ MORE SGX Nifty The SGX Nifty was at 10,420, up 0.32…

Gold, Silver Prices Punished By Strong Dollar, US Stock Market Rebound

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(Kitco News) - Gold and silver prices are lower and have hit three-week and four-week lows, respectively, in early-afternoon U.S. trading Wednesday. Improving trader and investor risk appetite in the marketplace at mid-week is bearish for the safe-haven metals. Also, a stronger U.S. dollar index that scored a new for-the-move high today is pressuring the precious metals markets this week. December gold futures were last down $9.00 an ounce at $1,216.30. December Comex silver was last down $0.177 at $14.28 an ounce.Global stock markets were mixed to mostly higher today. U.S. stock indexes are solidly higher in afternoon dealings. There is still near-term technical evidence the U.S. stock indexes have put in market tops. Volatility in the U.S. stock market could still appear at any time, as seen with Monday afternoon’s price swoon.Today is the last trading day of the month, which makes it a more important trading day, from a technical chart perspective.Today’s U.S. ADP national employme…

Oil Price Fundamental Daily Forecast – Divergence Between WTI and Brent May Be Signaling Short-Term Bottom

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher early Wednesday despite the release of a bearish industry inventories report. Technically, oversold indicators may be contributing to today’s rebound. Fundamentally, investors are still concerned about rising U.S. supply and fears over the outlook for demand amid the escalating trade dispute between the U.S. and China.At 0719 GMT, December WTI crude oil futures are trading $66.80, up $0.62 or +0.94% and January Brent crude oil futures are at $76.86, up $0.91 or +1.20%.Crude oil futures hit a 10-week low on Tuesday, however, this move may have been exhaustion because prices are rallying early Wednesday despite the report of a bigger than expected inventory build.Late Tuesday, the American Petroleum Institute (API) reported a crude oil inventory build of 5.69 million barrels for the week-ending October 26. This was the fourth build in as many weeks as reported by the API. Analysts were looking …

High Oil Prices Are Already Destroying Demand

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Crude oil prices have gone up high enough to begin hurting demand for the commodity, the chief of the International Energy Agency, Fatih Birol, said as quoted by Reuters on the sidelines of an industry event in Singapore.Birol noted the adverse effect of higher oil prices on large emerging economies in particular, including India and Indonesia, saying, “Many countries’ current account deficits have been affected by high oil prices.”The negative effect has been compounded by a slide in local currencies as well, a development that can also be at least partially traced back to higher oil prices and their effect on current account deficits.The good news, at least for consumer nations, is that this situation cannot continue indefinitely and with dampened demand prices should go down as well at some point.“There are two downward pressures on global oil demand growth,” Birol told Reuters. “One is high oil prices, and in many countries they’re directly related to consumer prices. The second o…

W&T Offshore, Inc. (WTI) Gearing Up For A Big Rally

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W&T Offshore, Inc. (NYSE:WTI) closing share price quoted for October 30, 2018 was $6.6. The 4.27% rally might have been tempting for an investor to buy at this point and in fact that would prove a good idea, as sell-side analysts think there is almost 62.88% more gain yet to come for shareholders. The stock enjoyed an overall uptrend of 99.4% from the beginning of 2018. Analysts seemed to set $10.75 as highest price target on its way to greater gains. The average 12-month price target they expect from the stock is $8.25. This mean price target represents 25% upside over its previous closing price. The median price target they presented was $9.5 for the next 12-months, which suggests a 43.94% upside from current levels. Some analysts have a lowest price target on the stock of $4.5, which would mean a -31.82% gain in value.A fresh roundup today notes that WTI stock has added around 117.11% of its value in the past 12 months, suggesting more investors have expressed joy over about in…

Oil Price Fundamental Daily Forecast – Divergence Between WTI and Brent May Be Signaling Short-Term Bottom

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher early Wednesday despite the release of a bearish industry inventories report. Technically, oversold indicators may be contributing to today’s rebound. Fundamentally, investors are still concerned about rising U.S. supply and fears over the outlook for demand amid the escalating trade dispute between the U.S. and China.At 0719 GMT, December WTI crude oil futures are trading $66.80, up $0.62 or +0.94% and January Brent crude oil futures are at $76.86, up $0.91 or +1.20%.Crude oil futures hit a 10-week low on Tuesday, however, this move may have been exhaustion because prices are rallying early Wednesday despite the report of a bigger than expected inventory build.Late Tuesday, the American Petroleum Institute (API) reported a crude oil inventory build of 5.69 million barrels for the week-ending October 26. This was the fourth build in as many weeks as reported by the API. Analysts were looking …

Oil Price Fundamental Daily Forecast – Chart Pattern Suggests Prepare for Surprise News

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed early Tuesday. Five days of sideways trading action suggests investor indecision and impending volatility. It looks as if traders are waiting for some big news.It could come from equities where the major global stock indexes are rallying on the back of an impressive rebound in China’s key indexes. According to reports, the rally in the mainland Chinese stock market started after the country’s securities regulator said it would improve market liquidity and guide more long-term capital into the market.After this month’s huge decline, bullish crude oil investors are looking for any news that could encourage an end-of-the-month recovery. This could include profit-taking, short-covering or aggressive counter-trend buying.At 1138 GMT, December West Texas Intermediate crude oil futures are trading $67.01, down $0.03 or -0.05%. January Brent crude oil is at $77.11, down $0.26 or -0.34%.Fundament…

Commodities Daily Forecast – October 31, 2018

GoldThe gold market continued to remain bullish as it trying to build up enough momentum to break above the $1250 level. A break above that level could likely send the gold prices towards the $1275 level and then $1300 level. The market overall will continue to be noisy as lately, USD has also started gaining strength. Important support for the market is placed at $1230 level, extends down to the $1200 level. …Read MoreSilverThe silver is finding support near the $14.50 level as traders are looking for value. The market recently broke above a major downtrend line which was offering a bit of resistance and is likely to move higher towards the $15 level and above which will be a bullish sign. The silver market has a significant amount of support extending down to the $14 level, which will keep the buyers busy. Trends in the gold market will help to chart out the future price action in the silver market. …Read MoreWTI Crude OilThe crude oil market has been negative all through yesterday’…

Oil Price Fundamental Daily Forecast – Divergence Between WTI and Brent May Be Signaling Short-Term Bottom

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading higher early Wednesday despite the release of a bearish industry inventories report. Technically, oversold indicators may be contributing to today’s rebound. Fundamentally, investors are still concerned about rising U.S. supply and fears over the outlook for demand amid the escalating trade dispute between the U.S. and China.At 0719 GMT, December WTI crude oil futures are trading $66.80, up $0.62 or +0.94% and January Brent crude oil futures are at $76.86, up $0.91 or +1.20%.Crude oil futures hit a 10-week low on Tuesday, however, this move may have been exhaustion because prices are rallying early Wednesday despite the report of a bigger than expected inventory build.Late Tuesday, the American Petroleum Institute (API) reported a crude oil inventory build of 5.69 million barrels for the week-ending October 26. This was the fourth build in as many weeks as reported by the API. Analysts were looking …

Oil Price Fundamental Daily Forecast – Chart Pattern Suggests Prepare for Surprise News

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading mixed early Tuesday. Five days of sideways trading action suggests investor indecision and impending volatility. It looks as if traders are waiting for some big news.It could come from equities where the major global stock indexes are rallying on the back of an impressive rebound in China’s key indexes. According to reports, the rally in the mainland Chinese stock market started after the country’s securities regulator said it would improve market liquidity and guide more long-term capital into the market.After this month’s huge decline, bullish crude oil investors are looking for any news that could encourage an end-of-the-month recovery. This could include profit-taking, short-covering or aggressive counter-trend buying.At 1138 GMT, December West Texas Intermediate crude oil futures are trading $67.01, down $0.03 or -0.05%. January Brent crude oil is at $77.11, down $0.26 or -0.34%.Fundament…

Commodities Daily Forecast – October 31, 2018

GoldThe gold market continued to remain bullish as it trying to build up enough momentum to break above the $1250 level. A break above that level could likely send the gold prices towards the $1275 level and then $1300 level. The market overall will continue to be noisy as lately, USD has also started gaining strength. Important support for the market is placed at $1230 level, extends down to the $1200 level. …Read MoreSilverThe silver is finding support near the $14.50 level as traders are looking for value. The market recently broke above a major downtrend line which was offering a bit of resistance and is likely to move higher towards the $15 level and above which will be a bullish sign. The silver market has a significant amount of support extending down to the $14 level, which will keep the buyers busy. Trends in the gold market will help to chart out the future price action in the silver market. …Read MoreWTI Crude OilThe crude oil market has been negative all through yesterday’…

US crude sinks 1.3% to 10-week low, settling at $66.18, as trade tension weighs on economic outlook

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Oil prices fell more than 1 percent in choppy trading on Tuesday on signs of rising supply and concern that global economic growth and fuel demand would be hit by a deepening of the U.S.-China trade dispute.Benchmark Brent crude oil was down $1.65 a barrel, or 2.1 percent, at $75.69 by 2:23 p.m. ET. U.S. light crude dropped 95 cents, or 1.4 percent, at $66.09.Earlier in the session, Brent reached a session low of $75.09 a barrel, while WTI slumped to $65.33 a barrel. Both contracts have fallen about $10 a barrel from four-year highs reached in the first week of October.Prices were pressured as U.S. inventories were expected to rise for a sixth straight week as other top producers Saudi Arabia and Russia signaled potential output increases. Oil has been caught in the global financial market slump this month, with equities under pressure from the trade conflict between the world's two largest economies.The United States has imposed tariffs on $250 billion worth of Chinese goods, and …

Oil Prices Inch Higher Despite Crude Build

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The American Petroleum Institute (API) reported yet another crude oil inventory build this week, this time of 5.69 million barrels for the week ending October 26. The build was the fourth in as many weeks as reported by the API. The report was largely in line with analyst expectations that this week would see another substantial build in crude oil inventories of 4.110 million barrels.The string of builds weighed heavily on prices, which were already depressed after IEA warned on Tuesday that the longer trend of higher oil prices would start to dent demand in key oil consuming markets such as India and Indonesia.According to API data, the six-week running tally of crude oil inventory gains equals 27 million barrels.The API reported a draw in gasoline inventories as well for week ending October 26 in the amount of 3.5 million barrels. Analysts had predicted a draw of 2.137 million barrels for the week.Oil prices were down in afternoon trading prior to the release of the API data on inve…

US Gulf Coast Crude Oil Exports To The UK Bounce Back

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Crude oil cargoes delivered to the UK from the U.S. Gulf Coast bounced back from a five-week low, with week-on-week delivered crude oil cargoes into the UK up by around 1 million barrels in the week to October 26, data from S&P Global Platts Analytics showed on Tuesday.Crude oil cargoes from the U.S. Gulf Coast delivered into the UK included two cargoes of 536,000 barrels and one cargo of 501,000 barrels, all of which were delivered in Liverpool.Yet, despite the rise of U.S. Gulf Coast cargoes delivered to the UK, total crude cargoes that arrived in northwest Europe in the week to October 26 were down 262,000 barrels week on week to a total of 2.104 million barrels, according to S&P Global Platts.In recent weeks, demand for crude in the region has declined amid Fall refinery maintenance and surging freight rates.Freight rates for Aframaxes started to increase in early October, and the rates for the USGC-UK Continent route also steadily increased until Friday last week, when th…