Showing posts from January 10, 2021

Weekly oil price remains static despite fluctuations

  The weekly oil price remains static despite frequent daily fluctuations. Saudi Arabia’s desire to cut oil output further has had an impact on the supply side of equation; whether the rest of the members agree with the word’s top exporter of crude oil remains to be seen. When the oil price increases at this rate, unlike when it happened years ago, there is a standing army to intervene – the shale oil producers. There are clear signs that they will chip in at any time – much sooner than analysts think they would. Some OPEC+ members may be nervous about treading on the road more travelled by the organisation in its history. It looks like that the markets do not show knee-jerk reactions to the lockdowns anymore; they, instead, focus on the output, crude oil stocks and economic data from the world’s top users in Asia.

Three factors that push the oil price up

  The oil price that fell slightly on Wednesday morning, started recovery again by early evening from stronger than expected economic data from China. In addition, the colossal stimulus package announced by the incoming US president, Joe Biden, struck a chord with the global markets as a whole with his unequivocal message – “There is no time to waste.” Mr Biden unveiled $1.9 trillion package in order to support the struggling Americans as well as roll out the vaccines as soon as practicable in order to minimize its toll being taken on the ordinary Americans. Not only is a daily death toll over 4000 a day, a humanitarian issue, but also is becoming a moral issue, as the world’s most powerful nation struggles to get a grip on it. It’s clear that the cuts by the OPEC+ has a direct impact on the supply side of the evolving oil equation and if the price continues to surge to an extent that can damage the tentative economic recovery, Mr Biden may not be in a haste to ban fracking on

US Crude Oil Inventories down Again: over 3 million bpd draw

  Oil price is slightly down on Thursday in the markets. A major factor that determines the price, however, is down again for the third consecutive week since the Christmas. The rate of drop has come down, though. US crude oil inventories, according to the data published by the EIA, US Energy Information and Administration, are down by over 3 million barrels per day in the week ending January 8 th . The corresponding predicted inventory draw by the API, American Petroleum Institute, was much higher than the figure given by the EIA – over 5 million barrels. The consistency of the inventory draw for three successive weeks shows that the demand is rising and even irreversible, despite the numerous logistical issues surrounding the vaccination programmes and potential to cause more mayhems by the new variants of the Covid-19. The EIA is also optimistic about the future demand of oil in 2021 – and beyond it; it maintains a positive outlook. The demand in Asia, meanwhile, is on t

Hoisting Oil Price:the latest string in the pulley system - US$

  As oil rally continue to defy the negative sentiments surrounding the major economies, the lever system that hoists it got yet another boost from the weakening dollar. The price of crude oil is at a 10-month-high, having suffered terribly during the first wave of the pandemic; it even forced the academics to rewrite the history, when the price went negative for the first time ever on April 20 th . The recovery has been fairly steady since October 2020, despite the outbreak of the Coronavirus across the world at varying rates. The success of vaccines, however, managed to lift up the mood of the investors and analysts that continue unabated. The production cut by the OPEC+, for certain, boosted the price. In addition, the following factors helped too: Significant inventory draw The rise in rig count Heavy demand in Asia Onset of cold weather fronts in Europe and America Relative calm in the Middle East The latest boost from the weakening dollar keeps the price of crud

Will shale oil producers chip in to fill supply gaps?

The oil price rally continues and the fluctuations that we saw on Monday can be mainly attributed to the relative strength of the US dollar – a development that some analysts see as a correction. Normally, there has been an inverse relationship between the strength of the US dollar and the oil price: the stronger the dollar, the lower the price of a barrel of crude oil. The oil price on Tuesday, however, continued to rise, perhaps reflecting the real fall of supply and other key factors that potentially influence the markets: ·        Followed by Saudi Arabia and Iraq, the UAE and Kuwait also raised the crude oil price for Asia ·        The daily output cut of 1 million barrels a day by Saudi Arabia ·        Due to a severe cold snap, Kazakhstan could not contribute its hike in output, a part of modest 75,000 barrels per day along with Russia that was agreed upon at the recent OPEC+ meeting ·        Unusually cold weather in some parts of Asia, especially in China and Japan

Going with the flow: Iraq increases the price of oil to Asia after Saudis

  Iraq that has been suffering from months of social unrest, stemmed mainly from harsh economic realities, finally saw an opportunity to boost its coffers, perhaps being inspired by Saudi Arabia. It raised the crude oil price for Asia to $1.10, an increase of 0.70 cents. Saudis did the same last week for the region. Iraqi unrest mainly springs out from Basra, the oil-rich, Shia-dominated southern region. Iraqis raised the price of Basra light crude for Asia, perhaps in the hope of addressing the catalogue of grievances raised by the protestors over the lack of basic facilities, despite playing the key role in bolstering the state’s revenues. Iraq may not be as influential as Saudi Arabia in the OPEC+, despite being the world’s second biggest oil exporter. Its potential for substantial output, however, remains significant, once the internal dissension is addressed satisfactorily. In a surprise move, Iraq is cutting the prices of all forms of oil to Europe by at least 0.80 cent

Weekly Oil Price Progress: steep price rise

The oil price rise is continuing and the geo-political crises in the Middle East are on the wane. The restoration of diplomatic relations between Qatar and the Saudi Arabia has been the most significant news during the week. The process was then extended to Bahrain and UAE too. The relations between the Sunni block and Iran, however, remains to be seen, especially when the new US administration take over the reins. Iran’s insistence on being compensated for the loss of income due to sanctions and determination to enrich uranium up to 20% could be the main stumbling blocks in the event of making effort to salvage the 2015-nuclear deal that was signed when President Obama was in power. Much to investors’ surprise, the oil price does not seem to be responsive to Coronavirus data anymore; at present, the situation is much worse than what we saw in April last year. In the UK, there were over 5000 deaths last week alone, with surging infections; the Mayor of London even issued a notice of se

Rising Oil Price: OPEC+ members can rub their hands with glee!

Crude oil prices are increasing at a steady pace, proving doom-mongers wrong once again, while defying the factors that potentially could diminish the demand in the middle of the second wave of the pandemic in the West. Not many analysts believed that the production cuts by the OPEC+ would have such an impact on the price of oil; Brent crude hit above $55 on Friday, with WTI closely following the pattern. The resurgence of oil price, having been battered by the effects of the Coronavirus for months, has excited key players at the heart of the industry – for obvious reasons. The US rig count, for instance, went up from by 8 during the past week, in the hope of cashing in on the loss of supply by the OPEC+. If the trend continues, the shale oil producers, both in the US and elsewhere, will take wing and become part of the diminishing supply side of the equation due to productions cuts by the OPEC. The weather has been on the side of oil producers too: in Europe, China, Japan and

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