Monday , May 17 2021

The Changing Global Oil Markets




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Traders work on New York Stock Exchange (NYSE) in New York, USA, on Friday, November 9, 2018. Stocks & USs are falling as investors consider what it is mushroom in oil prices means for the economy. Photographer: Michael Nagle / Bloomberg& copy; 2018 Bloomberg Finance LP

How fast things can change in oil markets. Month ago, the industry was set on Iran sanctions, a shortage of potential supply and lack of global spare production capacity – issues that send Brent oil price benchmark over $ 86 per barrel early October. Quickly on to now: Brent It's down 20% to around $ 66 per barrel while the US West Texas Intermediate (WTI) benchmark is approximately $ 56 per barrel. Saudi Arabia calls for 1 million barrels a day of production cuts from OPEC peers and non-OPEC allies, led by Russia, from 2019.

So what has changed? Much. There is a confluence of supply, demand and geopolitical events, as well as a rapidly moving market thinking, exhilarating oil traders and complicating the prospects for crude.

The International Energy Agency, the protective body for nations using OECD, now predicts a day supply surplus of 2 million barrels in the first half of 2019 if the status quo has, since the fears of earlier supply shortages have reversed. OPEC sees 1.5 million barrels a day outweighing, encouraging proposals from Members for cuts of up to 1.4 million barrels a day starting on January 1.

Bees are hiding across the market. The output has been rising to record a maximum in the US and Russia, while the Saudi Arabia swing producer has also managed to generate a production following the mitigation of OPEC / non-OPEC cutting agreement in June.

In the meantime, the US, the votes to take Iran's oil exports to zero have not realized. The Trump administration has said it will take a A "gradual" approach to enforcing sanctions, giving temporary waivers to Tehran's most important customers, including China, India and Turkey, to avoid stunning oil markets and rising prices.

One must surprise if Trump was taking a fast one on Saudi Arabia, pledging to completely eliminate Iran's exports to get the kingdom to sharpen its output suddenly, and he would know that it would be. The United States allows Iran to continue to export over a million caps a day to store prices before the elections of the middle of November 6.

As I said before, Trump is one of the most critical players in oil markets. After the oil prices appear stabilizing following Saudi Arabia's offer to break production, the Tutor was "hopefully" that the kingdom and OPEC would not follow the idea because oil prices should be "much lower based on supply!"

That message, along with Russia's doubt about cutting its production, has been enough to keep oil low – despite Saudi Arabia's suggestion that it will reduce output by 500,000 barrels a day in December due to the lower demand for its oil.

But demand really is at risk of failing, or does Riyadh want higher prices?

Oil traders noticed that China's demand, the emphasis on the growth of demand for global oil, looks firmly by the end of the year, and Chinese refineries ran near recording levels in October after reaching a peak in September. The story is the same in India, another essential element of demand growth. And lower oil prices should only strengthen demand.

The IEA believes that oil demand prospects remain firmly "with the growth of 1.3 million cessation per day in 2018 and 1.4 million banned per day in 2019, despite recognizing macroeconomic concerns such as the US-China trade war and depreciating money in several developing economies, which means expensive buying is more expensive.

Trump will again be a major factor on global economic growth – and so oil demand – as well as market opinion, is undertaking trade talks with China. The President could also do well on his pledge to bring Iran to the next May when sanction waivers are about to renew.

Even if Saudi Arabia has a breakdown agreement in Vienna next month, as many expect, Riyadh and its partners still lose a significant market share for oil producers in the United States, woutput is expected to exceed 12 million barrels a day in 2019.

Do not expect $ 55 per WTI not to grow US producers. The sector has experienced its resilience and again, after it has priced prices cut down to $ 40 per barrel or lower due to the 2014 price fall. At $ 55 a barrel, consultancy Rystad Energy is still waiting for the US production to raise over 15 million barrels a day by 2025.

As well, US producers look very protected at lower prices of oil next year after wearing a substantial production of 2019 when prices exceeded $ 80 per barrel earlier this year.

Indeed, one of the stories that have not been reported for this price is the role of banks and financial housing that took the other side of those bets with US producers. They have contributed by selling a raw future to control the risk that they derive from producer hedge programs in a falling market, with intensity and appreciation.

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Traders work on New York Stock Exchange (NYSE) in New York, USA, on Friday, November 9, 2018. Stocks & USs are falling as investors consider what it is mushroom in oil prices means for the economy. Photographer: Michael Nagle / Bloomberg© 2018 Bloomberg Finance LP

How fast things can change in oil markets. Month ago, the industry was set on Iran sanctions, a shortage of potential supply and lack of global spare production capacity – issues that send Brent oil price benchmark over $ 86 per barrel early October. Quickly on to now: Brent It's down 20% to around $ 66 per barrel while the US West Texas Intermediate (WTI) benchmark is approximately $ 56 per barrel. Saudi Arabia calls for 1 million barrels a day of production cuts from OPEC peers and non-OPEC allies, led by Russia, from 2019.

So what has changed? Much. There is a confluence of supply, demand and geopolitical events, as well as a rapidly moving market thinking, exhilarating oil traders and complicating the prospects for crude.

The International Energy Agency, the protective body for nations using OECD, now predicts a day supply surplus of 2 million barrels in the first half of 2019 if the status quo has, since the fears of earlier supply shortages have reversed. OPEC sees 1.5 million barrels a day outweighing, encouraging proposals from Members for cuts of up to 1.4 million barrels a day starting on January 1.

Bees are hiding across the market. The output has been rising to record a maximum in the US and Russia, while the Saudi Arabia swing producer has also managed to generate a production following the mitigation of OPEC / non-OPEC cutting agreement in June.

In the meantime, the US, the votes to take Iran's oil exports to zero have not realized. The Trump administration has said it will take a A "gradual" approach to enforcing sanctions, giving temporary waivers to Tehran's most important customers, including China, India and Turkey, to avoid stunning oil markets and rising prices.

One must surprise if Trump was taking a fast one on Saudi Arabia, pledging to completely eliminate Iran's exports to get the kingdom to sharpen its output suddenly, and he would know that it would be. The United States allows Iran to continue to export over a million caps a day to store prices before the elections of the middle of November 6.

As I said before, Trump is one of the most critical players in oil markets. After the oil prices appear stabilizing following Saudi Arabia's offer to break production, the Tutor was "hopefully" that the kingdom and OPEC would not follow the idea because oil prices should be "much lower based on supply!"

That message, along with Russia's doubt about cutting its production, has been enough to keep oil low – despite Saudi Arabia's suggestion that it will reduce output by 500,000 barrels a day in December due to the lower demand for its oil.

But demand really is at risk of failing, or does Riyadh want higher prices?

Oil traders noticed that China's demand, the emphasis on the growth of demand for global oil, looks firmly by the end of the year, and Chinese refineries ran near recording levels in October after reaching a peak in September. The story is the same in India, another essential element of demand growth. And lower oil prices should only strengthen demand.

The IEA believes that oil demand prospects remain firmly "with the growth of 1.3 million cessation per day in 2018 and 1.4 million banned per day in 2019, despite recognizing macroeconomic concerns such as the US-China trade war and depreciating money in several developing economies, which means expensive buying is more expensive.

Trump will again be a major factor on global economic growth – and so oil demand – as well as market opinion, is undertaking trade talks with China. The President could also do well on his pledge to bring Iran to the next May when sanction waivers are about to renew.

Even if Saudi Arabia has a breakdown agreement in Vienna next month, as many expect, Riyadh and its partners still lose a significant market share for oil producers in the United States, woutput is expected to exceed 12 million barrels a day in 2019.

Do not expect $ 55 per WTI not to grow US producers. The sector has experienced its resilience and again, after it has priced prices cut down to $ 40 per barrel or lower due to the 2014 price fall. At $ 55 a barrel, consultancy Rystad Energy is still waiting for the US production to raise over 15 million barrels a day by 2025.

As well, US producers look very protected at lower prices of oil next year after wearing a substantial production of 2019 when prices exceeded $ 80 per barrel earlier this year.

Indeed, one of the stories that have not been reported for this price is the role of banks and financial housing that took the other side of those bets with US producers. They have contributed by selling a raw future to control the risk that they derive from producer hedge programs in a falling market, with intensity and appreciation.


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