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Daily Oil Commentary by Matt Stanley


09/03/2017
By:Matt Stanley

Morning all. Brent closed down 2.81 last night to $53.11 and WTi closed at $50.28 down 2.86. Well nobody can say that i didn't warn you. Crude was due for a correction and the Extremely Informative Administration didn't disappoint did they? It wasn't so much that crude inventories rose 8.2mn bbls or that crude stocks are at a record high or that this is the 9th successive week crude inventories have risen. No no no. EIA raised its forecast on crude production for this year and next year as well. 300kbpd higher for this year to 9.21mnbpd and 200kbpd for next year to 9.73mnbpd. I don't care what spin you put on it that is a lot of crude oil. A lot a lot. Once the market had shrugged off the relatively balanced data when you take in to account product stocks (sizeable draws on both) it actually read the report properly and down we went - rapido. And then we have Exxonmobil announce a $20bn USGC expansion which will create 45,000 jobs (45,000!!) and will mostly be used for "crude oil exports". So they are obviously planning for the future and the US to be a sizeable crude exporter. Not a bad bit of broking there from Rex Tillerson as a leaving gift is it? Most people leave with a carriage clock and faded photos - not old Rex, he leaves knowing 45,000 more people will have gumbo at night with extra crawfish. Great name as well - Rex. I might start calling myself after a dinosaur - Alwaysabearasaurus. Not as catchy though. So what next? Well to be honest, in the short term at least, I don't really see what is going to keep this market propped up apart from some technical support levels. I think we will stay in a range but I reckon it will be 52.50 - 55 for a while yet, at least we're out of that stubborn 55 - 57 range. Watch the headlines - it is inevitable that before the week is out that rumours of another cut or an extension to the current agreement will be forthcoming. Good day.

 

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Last Update: 09/03/2017

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