Daily Oil Commentary

Brent closed last night at $58.99 down 1.49 and WTi closed down 1.08 to settle at $50.51. This market has got a worse stutter than Gareth Gates. The issue so far this year are many but the overwhelming theme so far in 2019 is a complete lack of market direction which in turn means people have got zero motivation to stick their necks out and take a position with a vision out longer than one day. Unless you're day trader of course - but then nobody listens to you anyway because all you talk about are triangle patterns, head and shoulder patterns and Just for men patterns. I made a point yesterday that the market is seemingly going round in circles and boy this market must be dizzier than a scuba diver with one flipper because that is exactly what we are doing right now. The issue is that nobody seems to have any confidence on what is happening with the major economies, perhaps the "Donald factor" has taken 2 years to kick in and only now is the market sitting back and saying perhaps I'll wait and see what he does next. I don't know, but with so much uncertainty comes one certainty - volatility. The market needs some reassurance, quite what exactly but I don't think it will be in the form a random tweet with many !!! on it, put it that way. The China-US trade talks need to come to a head - whether it's good news or bad, the market needs to know. The extent of the OPEC+ cuts are also a factor that needs to be known. But the biggest elephant in the room is going to what demand looks like the first few weeks of the year - only then can we expect to see some confidence back in to the market. Good day.

Daily Oil Commentary

Brent closed Friday down 1.20 to $60.48 and WTi closed at $51.59 down 1.00. 2019 is now in full swing and Brent has decided it doesn't like being in the $60's anymore. And why should it? I'm not necessarily seeing a bullish picture being painted for crude for the rest of the year and dare I say it, I have read more news articles with the dreaded word "recession" all over them than I have in a number of years. This time last week the market was full of optimism that the US-China trade talks were going to yield some immediate positive results and the world would be a happy place again and everyone could stop worrying. Now, I don't know about you but has anyone actually seen or heard anything tangible from last week’s talks? And saying "there will be more talks" is not bullish, thanks. In the meantime, the market is trading in annoying circles like a fat dog trying to scratch its ear. “Optimism” and “Hope” seem to the words of the year so far and neither of these two prove a firm footing has been found yet in 2019. US oil production is looking to delve in to uncharted waters of 12m bbls per day soon and even though the rig count dropped by 3 last week, drilling activity is still high. So where is the market looking for direction? Seemingly, and unsurprisingly it is looking at OPEC+ and whether those cuts will be enough to put a dent in the US's seemingly insatiable appetite for oil production. Best of luck on that one. Good day and week to all.

Daily Oil Commentary

Brent closed last night at $61.44 up 2.72 and WTi closed up 2.58 to settle at $52.36. I was listening to the radio this morning and the news headline was, "Good news! Oil prices are up 15% since December!". Now, I don't know about you but as a consumer how is that good news? That's like walking in to a pub and the landlord saying "Good news! The price of beer has gone up 15%!". It’s not good news is it. I mean if you're part of OPEC+ it is epic news but not as a consumer. The rally we have witnessed so far in 2019 is nothing to do with fundamentals, the rally is purely based on optimism and hope. Don't get me wrong I'm as optimistic as the next guy but I'm also a realist. For e.g. I was really optimistic about my diet, but the realist awoke in me yesterday and fall off that wagon I duly did. I wonder if the oil market will follow suit and fall off it's wagon. We shall see. EIA data last night once again disappointed the bulls and we saw an aggressive sell off straight away. Then someone decided to ignore the facts and bid up the market went my oil chums. For no reason whatsoever so please don't ask me. In case you're interested US crude stocks slipped 1.7 million barrels whilst product stocks rose an eye watering combined total of 18.7mn bbls. Yep 18.7mn. MILLION. MILLLIOONNNNN. That is a staggering volume of products though for one week; That's 2.7mn bbls per day. Market reaction? Of course, “Great! Let’s keep on buying futures". Whatever mate. No good news is coming out of China and the US delegation have tried to slip out the back door quietly, so nobody spots them. Fed minutes should be interesting later as this should give the market some general direction regarding US monetary policy for 2019 so keep your eye on cable. I sense an end to the rally but whether this will be a blip in an otherwise positive year so far will be up to those schizo day traders to decide. Good day.

Daily Oil Commentary

Brent closed last night at $58.72 up 1.39 and WTi closed up 1.26 to settle at $49.78. Alright, who wants it - when will the first Trump tweet be about high prices and how many !!!! will there be? I reckon this evening at around 1900 EST and it will read something like this, "Once again we face high gas prices!! Not good!! We prove to the world we can fight our way out of a teabag and we shall not accept high prices again!!!! Not good OPEC!!!!". Something along those lines anyway. Like it or not Saudi Arabia are in the blue corner and the USA are in the red corner. One wants high prices for fiscal budget purposes and one wants that utopia for his re-election, i.e. reasonable prices for gas guzzling consumers and prices high enough that they support the ever-growing US oil production economy. Quite a colossal battle I think you'll agree, like an angry Ewok versus an angry Ommpahloopmah - that's a fight everyone wants to see. Not that I'm saying the Saudi and the US are fighting, I'm just saying that these two allies are opposing forces when it comes to the direction of the oil market. In the middle of all this however is a market where people wake up, read only bullish news and spend the rest of the day leaning on the BUY button, even though nothing really tangible has changed fundamentally. In fact, if last night’s APi data is anything to go by then a net increase in US oil stocks of 9.573mn bbls (crude draw of 6.12, disty build of 10.2 and gasoline build of 5.5mn build) is a far cry from a "balanced" market. US oil production stayed steady at 11.7mn bbls. I say "steady" in a loose sense; Jan 2018 US oil production was 9.492mn bpd so we're still 2.2mn bbls higher right now. How much were the OPEC cuts? 1.2 mnbpd? Balanced market? Hmmmm. FWIW I'm rooting for the Ewok. Stats later. Good day.

Daily Oil Commentary

Brent closed last night up 0.27 to $57.33 and WTi closed at $48.52 up 0.56. How is everyone enjoying their vegan/gluten free/low-calorie/ low-sodium/taste-free mung bean salad with water dressing for lunch? Thought so. Well as sure it is that over the next few weeks all those New Year's resolutions are out the window the same can be said for the oil market and that is, same old same old. I have said this a million times but the main factor of what will drive crude oil prices over the foreseeable future will be based on the volume the USA are producing. The dynamic of US production is its reactionary ability to flat price. Prices up = pump more. Prices down = pump less. This is reflected in the weekly Baker Hughes rig count and this should be the weekly set of data that the market now relies on - not EIA data. Try as they might however, OPEC and his merry band of men (and women of course) meet twice a year and they seem to have more of a driving force about where prices will be heading - go figure. It is clear that the market is already pricing in that Saudi are once again taking the bull by the horns, literally, and cutting production by more than is needed. Perhaps they oversupplied the market in November thinking the Iranian sanctions would leave a sizeable hole to fill and this latest set of cuts is merely putting things back in to equilibrium. The rhetoric however regarding prices down must mean OPEC+ lead by Saudi Arabia will cut production is, quite frankly, becoming boring to the market. The market needs stimulation and the same old patterns just won't cut it in an algorithmic flat price trading environment. 2020 sulphur change? Now that's something to get your teeth in to. Good day.

Daily Oil Commentary

Brent closed Friday at $57.06 up 1.11 and WTi closed up 0.87 to settle at $47.96.

Brent closed Friday at $57.06 up 1.11 and WTi closed up 0.87 to settle at $47.96. Ahhh, that first big shop post-Christmas - Where you fill your shopping trolley with all kinds of gravel and stupid seeds to throw over some special yoghurt made by nearly extinct cows who have been raised by blind Nuns in the middle of a grassy plain on the banks of the Alps and milked by orphans. Throw in loads of fruit and some lean meat and the path to 2019 looks a righteous one. Then you realise you're still a bull in this oil market and the shopping trolley this coming weekend will be filled with pot noodles and wotsits. Saying that, things are looking pretty positive so far in 2019, aren't they? Since their low in December oil prices have risen around 10%. We're up again this morning on the back of renewed optimism about reduced oil supply and that the US and China are going to get on really and the raised tariffs were only a mere blip. Ummmmm OK. As you may have gathered over the course of the last few years, I am not so bullish. I'm not just being belligerent either - there is myriad data that points to a slow down globally. Granted, most of the economic headwinds can be cushioned by a truce between the US and China but it is not just these two behemoths that the Global economy relies on. Fundamentally we are still in an oversupplied crude oil market. OPEC+ cuts should go some way in rebalancing that but the market will once again be faced with high prices, which if 2018 is anything to go by, will cripple demand. However, OPEC seem not be too concerned about oil demand which I think is the right approach - it is down to supply in their opinion. The problem is that the US seem to disagree. Whatttt? Donald Trump disagreeing with something? Never. Good day and week to all.

Daily Oil Commentary

Brent closed up 1.11 last night to $54.91 and WTi closed at $46.54 up 1.13. In times of fragility and uncertainty will come a period of volatility. And boy are we witnessing some volatility so far this year and we're only one trading day in to it! They say the Apple doesn't fall far from the tree. Well let me tell you something Mr Cook, poor sales of your iPhone have made your share price fall way down the Nasdaq, forget the tree mate. Of course, it was inevitable that this Sino-US trade war was going to have an effect on demand and it really have couldn't have come at a worst time, right at the start of the year. Crude followed suit in early trading this morning and focus now shifts firmly on to what demand figures are going to look like in Q1 this year. All the major banks have released their "forecasts" for the year ahead on both a macro and individual asset class level. It's like watching a round table of posh bankers and everyone has Tourette’s. Re oil - some say they are bullish and some they are bearish but at the same time the people who are bullish are also bearish. I can only imagine JP Morgan vs Citibank at that Tourette meeting shouting MINE YOURS in each other’s faces. Ha. In all seriousness though nobody really has a bloomin' clue what is going to happen this year and it stems from one man - POTUS. Love him or loathe him, the greatest certainty this year is the uncertainty of Donald Trump. At any point could he strike a deal with China and boom, everybody is happy again. On the other hand, he could start taking a dislike to someone else and box them and boom back down we go. I suggest everyone watch twitter like a hawk. Oh, and keep an ear out on that Tourette meeting. Good day.

Daily Oil Commentary

Happy New year to you all. I wish 2019 brings you health, wealth and happiness. Unless you're bullish this crude market - then I wish you good luck and that's about it. Brent closed on Monday up 1.60 to settle at $53.80 and WTi closed at $45.41 up 0.08. Well another year starts and the future for the oil market is about as certain as the Arsenal back 4 at Anfield. However, with catastrophic losses comes a period of consolidation - Fulham proved to be Arsenal's but can Claudio do the same for the oil market? Alas, not - even if he does try and buy everyone a pizza after a good day. On a macro level I cannot see crude breaking out of this range for a while and dare I say it - I fear Brent may even be at the top of its trading range right now to be honest, perhaps there is some upside potential to $60 (?) but economic uncertainties will be need to be rectified before the bulls can really start flexing any muscles. Across the barrel, this depends on OPEC+ compliance and what grades of crude they are churning out to really see what impact this will have on the lighter end of the barrel. Fuel oil is set for its biggest shake up since ships were burning coal so expect some volatility once the new specs are out, probably 2H this year. I made a point in Dec 2017 (yes, I really am an oracle if you didn't already know) that the US will be the biggest crude oil producing nation within 5 years. Granted, it only took them 1 year to reach this goal but reach it they did and I can't see them slowing down any time soon, unless of course WTi breaks through the psychological $40 per bbl number, but that will mean every computer in the whole of the USA will probably blow up so if it WTi does break through it then expect a crash worse than recent memory allows you. New Year’s resolutions? As always, mine is stop making New Year’s resolutions. And stupid bets regarding swimming attire. And perhaps not to be as grumpy. But where's the fun in that? Good day, week and year to all.  

Daily Oil Commentary

baseline'>Oh my Giddy Aunt - Brent closed down 3.35 last night to $56.26 and WTi closed at $46.24 down 3.64. I don't know who has woken up in a worse mood this morning, Jose Mourinho or Brent. Seeing as it is only 6 days before Christmas, I thought I would write a song about Jose and the Brent market put together:

On the first day of Christmas the Glazer's gave to me a P Forty five. On the second day of Christmas OPEC gave to me Too much crude oil. On the third day of Christmas my true love gave to me Three French dud defenders. On the fourth day of Christmas a demand forecaster gave to me four calling bloombergs (that there isn't too much oil actually) Fiveeeeee Stupidddddd tweetsssss, Four calling Bloom's, 3 dud defenders, too much crude oil and a big giant P4555. On the sixth day of Christmas my true love gave to me 6 Bull's a lying, fivveee stupid tweets, 4 calling bloom's, 3 french duds, too much crude oil and big giant P45. On the 7th day of Christmas my true love gave to me 7 points since August, 6 bull's a lying, 55555 stupid tweeetssss, 4 calling bloom's, 3 french duds, too much crude and a big giant P45. On the 8th day of Christmas my true love gave to me 8 bears a milking (the crude oil market), 7 points since August, 6 bull's a lying, 555 stupid tweeets, 4 calling bloom's, 3 french duds, too much crude and big giant P45. On the 9th day Christmas my true love gave to me 9 texan drillers dancing, 8 bears a milking, 7 points since august, 6 bull's a lying, 555 stupid tweets, 4 calling bloom's, 3 french duds, too much crude and a big giant P45. On the tenth day of Christmas my true love gave to me 10 Klopp's a leaping, 9 drillers dancing, 8 bears a milking, 7 points since August, 6 bull's a milking, 5 stupid tweetttttssss, 4 calling bloom's, 3 french duds, too much crude and giant P45. On the 11th of Christmas my true love gave to me 11 Arsenal players piping (in a club, naughty boys), 10 klopp'as a leaping, 9 drillers dancing, 8 bears a milking, 7 points since august, 6 bull's a lying, 5555 stupid tweets, 4 calling bloom's, 3 french duds, too much crude and big giant P45. On the 12th days of Christmas my true love gave to me 12 Tired Stanley's 11 players piping, 10 klopp's a leaping, 9 drillers dancing, 8 bears a milking, 7 points since august, 6 bull's a lying, 555555 stupiddd tweeetssss, 4 calling bloom's, 3 french duds, too much crude and a biggg giannttt PPP 44455555. Good day.

Daily Oil Commentary

Brent closed down 0.67 last night to $59.61 and WTi closed at $49.88 down 1.32.

Brent closed down 0.67 last night to $59.61 and WTi closed at $49.88 down 1.32. Eeeeeshhk - it seems The Grinch is well and truly running riot in the oil market and before he steals the happiness from everyone let's throw in a Christmas cracker, shall we? What do frogs wear on their feet? Open toad sandals. Right, now that order is restored with that little beauty let's move on to this oil market. Brent has woken up in as bad a mood as I'm sure Theresa May has for the last few months. There seems to be very little at the moment that is ready to stand up and fight for the bullish cause and Rystad's latest report certainly didn't help matters yesterday. Around 8.8 billion (yes billion) boe was found in 2018 and that figure is set to increase to around 9.4 billion (yes billion) barrels in 2019. 2018 has also seen a significant uptick in the reserve replacement ratio to around 15% from 11% in 2017. Ouch. I don't see a demand forecast countering the increase in supply to balance the market either TBH. I suppose the market is already waiting to see what OPEC+ will do in April, which funnily enough coincides with whether the US will extend or cancel the Iranian waivers.  What else is going on? Well equities are ruining 11 months of hard work with a catastrophic collapse so far this month. That's tantamount to going on a diet for 11 months and then deciding to eat McDonald's every day for 2 weeks to congratulate yourself. Brexit rumbles on and I have to say that the only thing more boring to me right now than Brexit is the Man Utd back 4. Keep your eyes on the technicals over the next few days. Good day.

Daily Oil Commentary

Brent closed Friday at $60.28 down 1.17 and WTi closed down 1.38 to settle at $51.20.

Brent closed Friday at $60.28 down 1.17 and WTi closed down 1.38 to settle at $51.20. As the Christmas spirit gets in to full swing and every bloke on the planet is thinking "I've still got a week to go to get my presents, loads of time", the oil market is taking a breather, so to get things going again here's today cracker - What goes 'Oh, Oh, Oh'? Santa walking backwards. I told you they would get worse, didn't I? Anyway, moving on to this oil market. So, IEA published their latest monthly report on Friday and it wasn't particularly encouraging for the bulls but nor was it particularly that much of anything. The "highlights" (can you really say there are highlights on an IEA report?), were that apparently the market has found its "floor" and that demand is "slackening". Really Sherlock? I just don't get why they don't say "OPEC+ cuts are not enough to justify Brent being anywhere near $80 again, US oil is going to dominate and demand is pretty pony to be honest". Then everyone would stand up, applaud and move on. Even the people with the biggest brains on the planet were wrong by about 1mnbpd regarding the increase in US oil production this year and I fully expect them to be wrong next year as well and with the Trump twitter rhetoric seemingly never ending, I wonder how much further Brent could yet fall. Good day, and week to all.  

Daily Oil Commentary

Brent closed up 1.30 last night to $61.45 and WTi closed at $52.58 up 1.43.

Brent closed up 1.30 last night to $61.45 and WTi closed at $52.58 up 1.43. Seeing as most of you are either hungover from your Christmas party, currently enjoying your Christmas party or even getting ready for your Christmas party tonight, I thought I would keep it brief today. It's that time of year and indeed that kind of market right now which is going to remain rangebound. I don't think we will see more than a range of $58 - $64 per bbl on Brent until the end of the year and even after that I think the market will wait to see exactly where the US end up in terms of production numbers and if the Iranian sanctions are really having an effect on global supply. I will close the week with this - Who is Santa's favourite singer? Elf-is Presley. Trust me, if you think these are bad, you just wait until next week. Have a smashing weekend. Be seeing you……

Daily Oil Commentary

Brent closed down 0.05 last night to $60.15 and WTi closed at $51.15 down 0.50.

Brent closed down 0.05 last night to $60.15 and WTi closed at $51.15 down 0.50. OPEC must be feeling like every parent in the world this time of year - you work your level best off all year to give people a present and a fat guy in a suit (with a twitter account) gets all the credit. Once again EIA data failed to give the bulls any Christmas cheer however, they did try with all their might to keep crude supported but alas, one mince pie too many saw the market fall off a cliff coming in to the close. APi were bang on the money again as usual, they were only wrong by 9mn bbls this week (a 1mn bbl draw instead of anticipated 10mn bbls draw). Perhaps the bulls were looking at US oil production levels which were down 100kpd. Wow. So, the US are now only producing 11.6mn bpd? Panic!!! Not. OPEC late last night came out and said "… 2019 demand for its crude would fall to 31.44 million barrels per day, 100,000 bpd less than predicted last month and 1.53 million less than it currently produces.". Ouch. I have to admire OPEC, they must get a press conference together and say to each other "Quick, tell the market now, I think everyone's asleep. Sshhh". Anyway, all eyes on the December IEA report due out later and even these guys in their most optimistic of previous notes must have to at least confess that perhaps demand isn't looking as good. This, we shall wait and see. The UK PM managed to survive a no confidence test. Bravo. Can you imagine the pure level of dog house when she comes in to the office this morning for the people who wanted her out? "Youuuuuu, you are on my listtttt *evil looks*". Gulp. Today's cracker - Who hides in the bakery at Christmas? A mince spy. Honestly, I crack myself up. Good day.

Daily Oil Commentary

Brent closed last night at $60.20 up 0.23 and WTi closed up 0.65 to settle at $51.65.

Brent closed last night at $60.20 up 0.23 and WTi closed up 0.65 to settle at $51.65. There are many things the world is short of. British 5-pound notes for example. Teaspoons in a normal business hotel. Available taxi's after a late night out, something I'm sure many of you will unfortunately experience after you have danced the Hokey-Cokey with the IT guy you have never met before at your Christmas party. You get the idea. But the one thing the world is not short of is oil. I honestly sometimes feel like I am that mad looking thing from The Goonies, slapping my head against a table shouting "Heeeyyy you guysssss", because it seems to me that I am the only one who sees this fact - OPEC+ cut for 6 months next year is a total of 1.2mn bbls per day. So, 1.2mn bbls less than this time 2 years ago. US oil production is up 3.1mn bpd in the same 2-year period. Now I'm no mathematician but isn't that an additional 1.9mn bbls on the market compared to 2 years ago? Or is my name really Sloth? People are seeing a slowdown in the Global economy and demand just hasn't been what people forecast, yet crude is up *sighs*.. Anyway, on to other stupidity - API data. Apparently, we will see 10.2mn bbl drop on crude this week and this is bullish, even though 10 of the last 11 weeks have seen a gargantuan net build on crude. The question is however with the US now being a net exporter of oil, does EIA data have the same short-term influence on the market as it used to? I can answer that - of course it bloomin' does. Try taking EIA data away from a local day trader and you will be met with the same reaction as trying to take an iPad away from a child watching Baby Shark. Not worth it. You thought I forgot, didn't you? Today's cracker - " Why is it getting harder to buy Advent calendars? Because their days are numbered". Stats later and watch cable, Mrs May. Good day. 

Daily Oil Commentary

Brent closed down 1.70 last night to $59.97 and WTi closed at $51.00 down 1.61.

Brent closed down 1.70 last night to $59.97 and WTi closed at $51.00 down 1.61. Today's cracker and this one is particularly bad, but I make no apologies - "What did the beaver say to the Christmas Tree? Nice gnawing you". Ha! Moving on…crude is exactly where it was 2 weeks ago, before there was even a muting that there would be additional cuts agreed. Like a tight pair of trousers after a big Christmas lunch this market is about to break through all support levels. And what an ugly outcome may be before us - I mean I know I was a bit grumpy about why oil prices were so high but the realisation the market faces right now is that there really doesn't seem to be any good news. The bulls are clawing on to the fact that force majeure has been declared in Libya but, as I said last week, count on political utopia in Libya at your peril so I dismiss that as any form of a bullish headline. All I know is that it's a very difficult job at the best of time to give a "prediction" on where oil prices will be. I myself stupidly said that if oil hit $85, I would run around in a mankini, but that was in a different life and I was stupid. But the big banks have (in as stealth a way possible) down forecast the price of oil by around $10 per bbl over the last week alone. That's about 16% in today’s money. I genuinely don't think anyone can show me a justifiable reason as to why crude should have even been close to $85 per bbl based on fundamentals. I've said it a million times before, but I don't care - the destruction of high prices are high prices themselves. Put that in your Christmas pipe and smoke it Descartes. Good day.

Daily Oil Commentary

Brent closed up 1.61 on Friday to $61.67 and WTi closed at $52.61 up 1.12.

Brent closed up 1.61 on Friday to $61.67 and WTi closed at $52.61 up 1.12. First, today's Christmas cracker, and it's a goodun' - "Who delivers presents to baby sharks at Christmas? Santa Jaws". Babbbby shark do do do do do do (any parent will know that song and now you will be singing it all day. You're welcome). On to other more important things - this oil market but first I want to talk about new ideas. I'm not particularly a gadget kind of bloke, what I love is innovation. And something that has innovated my life over the last few years are 2 things - first the microfibre kitchen cloth. what an invention! there is nothing those little puppies can't shine or clean. The second is zip lock bags. My house is full of them. They keep things fresh for days as opposed to wrapping everything in cling film. In fact, you will more than likely find zip lock bags full of microfibre cloths in my kitchen cupbopards. But what the heck does that have to do with the oil market? OPEC wouldn't know what a micro fibre cloth or a zip lock bag if one came up to them and said "Cutting production yeah? Any other bright ideas?". The whole market knew EXACTLY what OPEC were going to do and judging by the close you can't say that the bulls were particularly enamoured by the decision. Something new needs to be thought of but I really don't see what else OPEC+ plus can do. The US rig count dropped by 10 but I wonder if that trend will continue - especially seeing as the US have once again been handed a Christmas card that says "Not as much oil from us as before, fill your boots. Best rgds, OPEC+". Good day and week to all.