Showing posts from January 17, 2021

Weekly Oil Price Drop: it's not that significant

  Although oil price dropped this week, the fall is not that significant, when compared with what it was last week. The drop in price, however, has rattled the markets somewhat, as the factors which usually influence the oil price were not in favour of an unstoppable rally. For example, the US crude oil inventories have gone up, deviating from the trend that had been the opposite for a few weeks. In addition, the high infection rates – and the deaths too – both in the US and Europe have finally had an impact on the investor-confidence. The fear of stricter lockdowns in China may have played a role too, as the latter is a key player when it comes to global demand. In this context, the twin move by the UAE and Saudi Arabia to cash in on the situation does not seem to be working in the long run; not only did they increase the crude oil price for Asia, but also cut down on the output, while warning the US shale producers not to flood the market with excess oil; whether the latter w

US Oil Inventories up again - stalling oil price rise can be accounted for

  The US crude oil inventories have gone up during the week ending, 15 Jan 2021, having been in decline for weeks. The latest data from the EIA, US Energy Information Administration, clearly show an upward trend. Since there is a strong correlation between the US crude oil inventories and the price of oil, the investors seemed to be aware of the rising crude oil stocks in the US. The oil price dropped for two consecutive days, after rising steadily for weeks despite the lockdowns. The rising Coronavirus cases in China and the strict lockdown measures that the Chinese will take have made the investors worried about the potential impact. The analysts, however, are not predicting a repeat of what happened on April 20, adding a new chapter to the history of the commodity for oil enthusiasts to analyse for years to come. ----------------------------------------------------------------------------------- Please click here to see the data that really matters for oil price.

Oil price: is this the only chart that behaves consistently - during good and bad times?

The crude oil price, at least shown by two primary benchmarks – WTI and Brent – has dropped today, finally being subject to the uncontrollable rate of infections of the Coronavirus across the globe despite the heightened enthusiasm about the vaccinations. The arrival of Mr Joe Biden to the White House in order to take the reins of the most powerful nation on the planet did not create the desired effect, dreamed of by the markets. Some benchmarks, however, such as OPEC Basket and Indian Basket are slightly up, buckling the trend. Both WTI and Brent, on the other hand,  showed their mutual closeness in following the trend in oil price once again, when some charts give out conflicting signals; it has been the pattern during both good times and bad times. Since the Western political thinking is inextricably linked to the two benchmarks in question, their behaviour in understandable in this context without using one’s grey matter. The Dubai benchmark, meanwhile, is also up despite

Oil Price: EIA predicts that demand will exceed supply in the first quarter, 2021

  The EIA, the US Energy Information Administration, in a report released today says that the oil demand in the first quarter of 2021 will be higher than that of the supply, citing the production cuts initiated by the OPEC+ and the decline in US crude oil production. The reports clearly states that the production cut by the Saudis for February and March by 1 million barrels a day will be a significant factor for the latest development. The estimated total oil production by the OPEC+ for 2021, however, is going to be higher than the expected figure, according to the EIA – from 25.6 million in bpd in 2020 to 27.2 million bpd. The total US crude oil production, according to the EIA, is just going to be 11.2 million bpd for 2021 – less than that of 2020. The EIA does not ignore the impact of the Coronavirus on the demand of oil. It says the demand will suffer for at least the next two quarters. While taking into account these factors, the EIA predicts that the price of Brent crud

Rising Oil Price: traders stubbornly maintain optimism

  Oil traders appear to be pinning their hopes on the colossal stimulus package proposed by the incoming Biden administration, as there is a possibility of a significant drop in demand due to new variants of the Coronavirus. The impact of the Coronavirus is far from being managed in the West despite the optimism of the leaders. The vaccines have not reached the status of magic bullets either. In the UK, the daily death toll has hit above 1600, the worst figure since the pandemic broke out; the infections are tantalisingly high too. In these circumstances, the possibility of easing lockdowns in a matter of weeks is almost zero. That means less traffic on the road as movements are restricted in proportion to rising infections. In this context, the demand for oil will suffer, as predicted by the leading energy watchdogs. This must be the thinking behind the Saudis in cutting down the output by 1 million barrels for February and March, in order to maintain the price of crude oil

Qatar tries to get Iran bak to the fold: Will the Middle East see lasting peace again?

  With just a day left before Mr Joe Biden taking the reins of the US administration and a complete policy reversal in the offing, there are signs that Qatar is attempting to bring Iran, a Shia nation and the rest of Sunni Arab nations in the Gulf closer in the coming days. Iran and the Sunni block, apart from Qatar and Turkey, have been diverging diplomatically and politically for years; at the core of the dispute, of course, is mainly the religious dogmatism.   The Qatari move comes in the wake of reinstating full diplomatic ties between Qatar, the gas-rich tiny Gulf nation, and the quartet consisted of Saudi Arabia, Egypt, Bahrein and the UAE. It was the last successful diplomatic manoeuvre by the outgoing Trump administration, preceded by initiating full diplomatic ties between Israel and the UAE, Bahrain, Morocco and Sudan. The Foreign Minister of Qatar, Sheikh Mohammed bin Abdulrahman Al Thani, told Bloomberg the desire of Qatar to bring back Iran to the fold. Qatar is

Shale Oil Producers and OPEC at Seesaw: is history about to repeat itself?

  The oil price has been rising steadily since October, 2020 and in January this year, both WTI crude and Brent crude have hit above the crucial $50 mark. OPEC+ made its contribution to the stabilisation of the oil price, having witnessed – and suffered – the worst, when the latter collapsed and even became negative for the first time in its commodity history on April 20; it was a bolt from the blue, as far as traders, producers and of course, analysts are concerned. The price of oil above $50 helps those who heavily rely on revenues from this source to fill their respective coffers, manage estimated budget deficits, handle generous welfare schemes for the populations, reverse spending curbs and invest more money in research and if circumstances permit, even do its duty in combating environmental damage. At moral level, more than at an economic level, the oil producing nations, especially in the Middle East, can keep millions of poor folks from Asia in employment without seeing a

Oil rig count is up again - for 8 successive weeks

  The oil rig count in the US went up by 12 this week, showing a steady growth for 8 successive weeks, reflecting the long arduous recovery of the oil markets - according to Baker Hughes. Both WTI crude and Brent crude are above the crucial mark - $50. Although, the price fell slightly on Friday, there is no indication of a calamitous drop as it happened during the height of the pandemic. It’s not just in the US where oil rig count has gone up; even in neighbouring Canada, the rig count went up by 44 this week. The notable aspect of the recovery in the oil price is the fact that it has not been skewed by the rising pandemic infections, global death toll and the emergence of new variants of the Coronavirus. Although authorities pin their hopes on the vaccines to see the light end of the tunnel, the public enthusiasm remains muted, apart from those who are in the vulnerable categories. The new, more, strict lockdowns introduced in the Western cities inevitably lead to significa

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