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Daily Oil Commentary by Matt Stanley


28/03/2017
By:Matt Stanley

Morning all.  Brent closed down 0.05 last night to $50.75 and WTi closed at $47.73 down 0.24.  Brent touched $50.03 before bouncing straight back up with the same ferocity that you withdraw your foot out of a bath that’s too hot.  However the bath water is still hot and we all know that once you get through the excruciating pain threshold the bath is then quite nice.  Not that I ever have a bath - I'm a bloke and we shower.  Anyway, resist as it might I do think the market will retreat below $50 in the next couple of days.  Whether the factor that pushes it over the edge will be a stronger US dollar, Trump's climate policy amendment or API figures later doesn't really matter even though I actually think all 3 topics are bearish for Brent in the short term.  I actually think the most bearish form of news is one that isn't really being talked about and that is the executive order Trump will sign on his predecessor's climate policy.  Now to be clear, this isn't some hair brained idea the lunatic fringe has had but a clear signal that the USA is looking to gain energy independence.  Let's bear in mind that the USA are still the biggest importers of crude and they have the highest domestic consumption per capita.  The US chamber of commerce have actually already been quoted in saying that domestic energy prices are too expensive.   Now this may be down to the fact that certain tariffs and taxes are applied and the consumer is bearing the brunt of it but it also means that the USA has somewhere it can put all the crude, coal and natural gas it will start to produce.  Couple this with the fact that the US is exporting more and more each week and the Brent/ WTI spread is trading -2.94 right now and I think we could have a behemoth of an oil nation.  This will inevitably put pressure on prices.  Good luck trying to fight that one OPEC.  Good day.

 

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Last Update: 28/03/2017

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