Daily Oil Commentary

Brent closed last night up 0.02 to $79.30 and WTi closed as flat as the Arsenal back 4 with no change at $71.49.

Brent closed last night up 0.02 to $79.30 and WTi closed as flat as the Arsenal back 4 with no change at $71.49. What has the week bought us? Well, I want to make one thing absolutely clear - it's YANNY, not LAUREL!!!! My wife hears Laurel, which of course started the domestics of all domestics. But what about the oil market? Another splendid week for all those involved in the OPEC agreement and those who work for a bullish oil fund. Brent is up another 2.5% w/o/w. *claps*. However, if yesterday is anything to go by then $80 per bbl perhaps is that step too far. When it reached $80 per bbl yesterday (which it did several times) the market reacted in the same way one does when they are testing if a bath is too hot, dip a toe, don't like it, let it cool down. Alas, I fear that I have to concede my fate that oil is going to hit $85 per bbl though and it wouldn't surprise me if we got there before the end of May, but I maintain my reasons as to why I was so confident that prices wouldn't get as high as they are and that was and is based on the physical fundamentals. Unfortunately, as I have been writing about for a while now, everything is so detached from reality when it comes to the oil futures market that things have, almost, gotten out of control. Let's see though, I'm sure we will test the $80 handle today at some point, I suppose it is now up to the very funds who put us up here in the first place to maintain some decorum. Watch the rig count later. Yanny....Yanny....Yanny. Have a good weekend.

Daily Oil Commentary

Brent closed last night at $79.28 up 0.85 and WTi closed up 0.19 to $71.49.

Ramadan Kareem. Brent closed last night at $79.28 up 0.85 and WTi closed up 0.19 to $71.49. This market is, quite frankly, absolutely peerless in making me look like a numpty at the moment. You may argue that many different things make me look like a numpty and I would tend to agree with you but Brent being up at $80 per bbl? I'll live but it really is starting to just bore me to be honest. Brent/WTI has widened to 7.67 and with all this crude oil the US are producing it makes a barrel of the Permian’s finest that much more attractive to just about everyone. I maintain what I said last week regarding why Trump reimposed sanctions on Iran - business. It was a pure and suimpole business decision to assist the US energy sector. I see that the IEA have finally said that demand isn't coming in as forecast and they have reduced the outlook for 2018 down by 100kbpd. This is a fairly significant shift considering they, and just about everyone else was saying how amazing demand will be this year. Don't get me wrong it has been fairly good but it was highly doubtful it was ever going to reach the numbers all the Brainiac’s came up with. Eventually high prices are going to hurt demand - that much is simple to work out. I wonder though if this Brent diff to WTi of over 7.50 per bbl is the doing of the US oil producers themselves. I'll leave you with this from ex-senator Mr Byron Dorgan who was on the energy policy committee to the White House, "If the Administration does nothing, high gasoline prices will continue to increasingly burden our economy, taking millions of dollars out of the hands of families and putting it straight into the pockets of OPEC.". The thing is Dorgy, it's not going to OPEC any more, is it? Good day.

Daily Oil Commentary

Brent closed last night up 0.20 to $78.43 and WTi closed at $71.31 up 0.35.

Brent closed last night up 0.20 to $78.43 and WTi closed at $71.31 up 0.35. You won't believe it right, but I ordered this mankini and it arrived, I took it home but my dog ate it! what rotten luck! I phoned the shop where I ordered it form and he said that was the last one and he won't have any new ones in for at least 3 years and that I better not call anyone else because he knows for sure that there are no other shops in the whole world that have any available right now. He also said not to ask any friends or peers or colleagues if they can get one delivered because there really really are no mankini's anywhere. Sorry about that. In other news crude is at $78 per bbl. I genuinely think this market may have topped out. Yes Mr Andurand says we may get crude up to $300 per bbl but he runs a fund that only buys crude derivatives so of course he is going to say that, he's not going to say "Listen guys, I'm long but I think prices are more reasonable at about the $60 per bbl mark. Can I have some of your money so I can buy crude futures pls?". I have been saying it for a while but there is a massive fracture between the physical and futures oil markets, and it has been fractured for quite some time. I read a very good article yesterday that finally agreed with me that this disconnect is now starting to take hold. Once the bulls start to take some profit I agree that we will see the market come off, and come off pretty aggressively. When that will happen, I'm not so sure. I suppose it is when the market realises that it wasn't very long ago when the word "glut" was glued to everyone's screens when they came to work in the morning. It is very easy for those pumps to be switched back on. Stats later. And? Good day.

Daily Oil Commentary

Brent closed last night up 0.26 to $77.47 and WTi closed at $71.36 up 0.22. What has the week bought us?

Brent closed last night up 0.26 to $77.47 and WTi closed at $71.36 up 0.22. What has the week bought us? Well, if you're Prince Harry then in theory he should be on his stag do this weekend so if you see a drunk ginger bloke running around Trafalgar Square in a woman’s dress then ensure you point and laugh but also call him, your majesty. What about the oil market though? Only one thing is really on everybody's mind this week and that is that the US have reimposed sanctions on Iran. I have to say that I thought the market would have reacted a little bit more aggressively, it has petered out in the same way as Arsenal's away form in 2018 has. Actually, nothing in the world is worse than Arsenal's away form in 2018 so ignore that. I read this morning that someone has said that OPEC “has the capacity to replace the Iranian losses” but warned that “even if physical supply is held constant... the market will still be faced with a precariously low level of spare capacity.” I'm sorry but how in the name of all that is holy is that true? Is the whole market refusing to acknowledge that US oil production is up 25% in just under 2 years? That more than replaces what the OPEC cut was all about in the first place!! I think the market might be starting to realise that things might just be a little toppy up here and that a correction might be on the cards. We shall see. I wish you all a smashing weekend.


Daily Oil Commentary

Brent closed last night up 2.36 to $77.21 and WTi closed at $71.14 up 2.08.

Brent closed last night up 2.36 to $77.21 and WTi closed at $71.14 up 2.08. Well, it was a delayed reaction, but crude certainly came to the party yesterday. Interestingly crude and the US dollar are tracking each other at the moment, something that has only happened 11 times in the last 35 years. Which is interesting. Not. I had quite a few calls yesterday asking my opinion about the sanctions and what I think will happen and I maintain what I said in my commentary yesterday morning. I really think that the whole reason the US are pulling out of the Iran nuclear deal is nothing to do with politics (let's face it, there is no evidence apart from Mr Netanyahu throwing a paddy that Iran have reneged on the deal), but is in fact a pure business reason. I also think that when everyone thought Saudi Aramco put their OSP's up to Asian buyers over the last couple of months that it was in fact a stroke of genius, not out of greed. Most people are expecting the Saudi’s to plug the gap so higher OSP’s? Makes perfect sense. Look I’m sure there are other reasons but my brain isn't big enough to cope with more than perhaps 2 things at a time. US crude production last night hit 10.7mn bpd and they are edging ever closer to overtaking Russia and becoming the world’s number 1 crude oil producer, something I said back in November would happen within 5 years. What is glaringly obvious is that there are many many oil producers who are willing and certainly able to nudge up production levels to cover any "short falls". A balanced market? Tell that to the US producers who like their volume nob at number 11. Good day.

Daily Oil Commentary

Brent closed last night down 1.32 to $74.85 and WTi closed at $69.06, down 1.67. So, the right honourable Donald of Trumpton pulled out of the Iran deal.

Brent closed last night down 1.32 to $74.85 and WTi closed at $69.06, down 1.67. So, the right honourable Donald of Trumpton pulled out of the Iran deal. Not a great shock but I was expecting a little more meat round the bone than just "The US will withdraw from the agreement". Gee, thanks Donny. I was told as a child to not just moan about a problem when you are faced with one but to look at the problem and come up with a solution, only then can you talk about the problem. Trump decides to just have a bit of a moan, pull out of the agreement and then walk off camera. Thanks. The market reacted negatively upon hearing the news and the closing numbers evidence the same, but then Asia woke up and said Oh crikey! Where will we get our crude from? And the market rallied 1.70 and has been trading there all morning really. However, I'll tell you where you'll get your crude from - the US of course! Call me a sceptic, call me what you want but I am starting to believe that Trump's energy agenda has now hit a critical moment. Let's face it, since Trump won the election in Nov. 2016 the US were producing 8.7mn bpd. In Apr 2018 the US were producing 10.6mn bpd. That's a 20pct increase in 18 months. So, where is all this crude to go? Simple really, if you knock out one of the world’s biggest producers you immediately open a business opportunity where all this crude can go. Trump is a business man and to be a business man you have to make harsh decisions. As much as I will keep my personal emotions hidden about the wally that is Mr Trump you can't take away from the fact that the US economy is pretty good shape, as are US jobs and as is the US energy industry. The one thing that the guy doesn't care about is his relationship with Europe. The market will keep a very close ear to the ground on the reaction from the EU this morning regarding the Iran nuclear deal. Covfefe anyone? Good day.

U.S. Pulls Out of Iran Nuclear Deal

Factbox by S&P Global Platts May 8

Energy, Metals Impact of President Trump’s Decision to Impose Iran Sanctions

Daily Oil Commentary

Brent closed last night at $76.17 up 1.30 and WTi closed up 1.01 to settle at $70.73.

Brent closed last night at $76.17 up 1.30 and WTi closed up 1.01 to settle at $70.73. Unless you've been living under a rock in the middle of the Empty Quarter for the last 4 months, you may have noticed that the bulls have been pushing the market up on the back of the possibility of the USA pulling out of the Iran agreement. Today is D-day. Tonight at 10pm Dubai time we will hear what his Trumpishness has to say. The bulls will be hoping that they have called it right, and that the US pull out of the deal. I'm sure we will see an initial reaction of flat price rallying, but I think that only if the EU pull out of the agreement as well will it mean that Iran are not able to export as much oil than they currently are, meaning that the market falls in to a supply deficit. Apparently, the fact that the US are producing more than enough crude than they were 2 years ago to easily plug a gap that Iran could leave behind, but that's about as interesting to the bulls as where Everton finish in the Premier League. All eyes on Washington later. To me however, the story of the week is the fact that, as an Arsenal fan, I am having to get used to the fact that Arsene Wenger will never manage an Arsenal side at home again. I don't care if you're the most avid Tottenham fan, you can't help but admire what Wenger has done for English football. I feel it only fitting to quote this poem about him:

Daily Oil Commentary

Brent closed last night at $73.36 up 0.23 and WTi closed up 0.68 to settle at 467.93. Let me tell you a story about logic.

Daily Oil Commentary

Whatever that is. Brent closed last night at $73.13 and WTi closed at $67.25. Brent is stuttering as it struggles to break out above $75 per bbl

Whatever that is. Brent closed last night at $73.13 and WTi closed at $67.25. Brent is stuttering as it struggles to break out above $75 per bbl. I wonder though, Q1 saw us more or less trading in a $65-$70 per bbl range, Q2 so far has seen us trade in more or less a $70 -$75 range. Does that mean Q3 is $75-$80 and Q4 $80-$85? Or is it really not that rudimentary? Either way I hope it is as that will mean the mankini makes no appearance whatsoever. I think the time has passed to justify whether crude oil prices should be up here. Like my mothers sunday roast, this market is overdone. I'm pretty sure we will flirt with some stupid numbers over the course of the next ten days until POTUS decides whether to reimpose sanctions on Iran. Mr Netanyahu has certainly put the cat amongst the pigeons it seems, so we will have to wait and see the course of action Trump decides. What else is going on? EIA data is out later, apparently, we will see a build on crude and gasoline according to APi. That's not particularly encouraging for the schizo bulls who trade against numbers still but there is some light at the end of the tunnel with Cushing stocks declining by 750kb. With driving season around the corner any builds on gasoline could cause this market to decline, and decline fast. Watch cable. Good day.

Daily Oil Commentary

Brent closed Friday at $74.64 down 0.10 and WTi closed at $68.10 down 0.09.

Brent closed Friday at $74.64 down 0.10 and WTi closed at $68.10 down 0.09. As the English football league draws to a close and every Arsenal fan is wistful and concerned about what the future may hold, I wonder if the crude oil bulls feel the same. Perhaps not me thinks. June Brent expires today and the front month is quite heavily backwardated so tomorrow we will see Brent still hovering near the $75 per bbl mark. What will cause it to break to the upside though? I said on Friday that if the US were to reimpose sanctions on Iran, fundamentally the market would not see a drop in production, and most of this is thanks to the US exporting around 2.3mn bpd, up some 1.5mn bpd since when the sanctions were dropped a couple of years ago, but the market doesn't care about the fundamentals and hasn't for quite some time so I don't foresee 2018 being the summer of discontent. I mentioned a couple of years ago that owning oil in a market similar to the one we are in now is a bit like buying a baby pet elephant. It's very cute and your mates come round and feed it peanuts etc but eventually that baby elephant will grow in to a massive jumbo and you'll be left trying to tame a 5 tonne beast in your back garden who is going to squash everything and cause you to lose your house. Now, I don't think the gravity of owning crude in this market is quite as dramatic as the pet elephant scenario but I think it's a matter of time before figures regarding demand throw a massive spanner in the works for the bulls. It's all about driving season. So - Drivers, start your engines!! (V8's if possible please). Sing holiday tomorrow so normal service will resume on Wednesday. Good day and week to all.


Daily Oil Commentary

Brent closed up 0.74 last night to $74.74 and WTi closed up $68.19, up 0.14. What has the week bought us?

Brent closed up 0.74 last night to $74.74 and WTi closed up $68.19, up 0.14. What has the week bought us? Well, if you're a Sunderland fan then look forward to a trip to Walsall to go and watch your team play football on a cold Wednesday night in February, but what about the oil market? It's all blissful in the land of the bull. Brent is up another 1% on the week and why not be up here? People seem convinced that the US are going to pull the Iran agreement, and this may disrupt about 350kbpd of production. Wow, 350kbpd of production eh? This is what I don't get and why I am stomping my feet and shaking my head with rage like a toddler whose new LOL has been taken away from him. Right, so the market is rallying to the dizzying heights of $75 per bbl on the back of Iranian sanction meaning 350kbpd being taken off the market. Ahem. US exports last week were 2.3mn bpd. In Jan 2017 US exports were 0.746mn bpd. So, if my maths is right that is an increase in US exports of 1.554mn bpd in available crude in the market since last January. Now let's stay on the maths path - 350kbpd may come off because Iran are sanctioned but the US are exporting more nets an INCREASE in available oil by 1.2mn bpd compared to Jan last year. Or am I being stupid? Don't answer that. I really want to believe in this rally in the same way I believe Arsenal may go through to the final of the Europa league but I know deep down I can't have any faith in either. Let's not forget that WTi is also pricing about 6 bucks below Brent atm as well...I don't know, it is what it is I suppose. The mankini is prepared.....Have a good weekend.

Daily Oil Commentary

Brent closed last night up 0.14 to $74.00 and WTi closed at $68.05 up 0.35.

Brent closed last night up 0.14 to $74.00 and WTi closed at $68.05 up 0.35. The more eagle eyed of you would have noticed that I have dropped both Bitcoin and INE crude from my morning crude numbers. Now, I'm not saying that INE futures are in any way like a cryptocurrency and thus a fad, but it certainly seems that the potential of INE crude as a new benchmark I think (even though it is early days) is nigh on over. When it comes to September I doubt there will be any physical delivery as everyone will have netted their positions but, I've been wrong many times before so it's one to keep an eye on. Anyway, moving on, EIA data was as predicted by APi (shock!) but the market didn't really react, and we closed around the levels we had been trading in all day. It's all a bit unsettling at the moment, geopolitical tensions aside, that if we look at the state of the global economy it's all looking rather rosy isn't it? Equities are up. The 10 year US treasury yield, the worlds most important bond-market indicator, is at 3%, the first time since 2014. Demand is apparently healthy. North Korea appear to be willing to show some form of diplomacy. Everyone loves Arsene Wenger again. WHAT'S GOING ON!! WHERE'S THE DRAMA??!!! Look I'm all for happy times and people giving each other slaps on the back and holding hands congratulating each other on how well everyone is doing a mighty fine job but will someone spark some kind of collapse or something?!!? Jeeze. Just for a week to break this apparent utopia please? I can't google mankini's any more. Thanks. Have a good day.

Daily Oil Commentary

Brent closed last night down 0.02 to $73.86 and WTi closed at $67.70.

Brent closed last night down 0.02 to $73.86 and WTi closed at $67.70. As the oil market settles down again after another busy MPGC, the price of Brent seems to be settling down to and enjoying a $70 handle. It all went a bit nuts at one point didn't it? I was really started to get concerned about the dreaded $85 per bbl as the rally seemed relentless. It's like Katie Price - it all started off very nicely and then it just went too far. I thought the market might react on the back of the Macron/ Trump meeting regarding Iran but, as with any news that isn't of a bullish nature it is ignored in the same way my wife ignored me the whole day yesterday after a very late finish on Monday night. Awkward. It's Wednesday so we all know what that means - EIA data. Apparently, we will see a build on crude and draws on everything else. Which is about as interesting as watching Everton vs Newcastle on Monday night. I do feel like that boy in your school class who was the only one who got the answer wrong and everyone laughs and points at him but I want to talk about demand. I read yesterday that China are buying more crude oil than ever but they also have more products to sell than ever. How is that good for demand? Just because they are buying crude oil doesn't mean that it is good for demand if the products that crude oil yields when refined doesn't actually go anywhere! That's like saying I'm only eating rice cakes as I want to lose weight and then you smother them in chocolate sauce, bacon, peanut butter and whipped cream and are happy with yourself about your new low calorie diet. Anyway, watch Brent/WTi - it's trading -6.16 at time of writing and Cushing stocks later could blow it further...who knows. Good day.

Daily Oil Commentary

Brent closed last night up 0.40 to $73.78 and WTi closed at $68.29 down 0.18.

Brent closed last night up 0.40 to $73.78 and WTi closed at $68.29 down 0.18. What has the week bought us? Well, if you're Jose Mourinho then another year of failure looms large (says a very chirpy Arsenal fan...), but what about the oil market? Another beaut of a week if you're a bull (any bears out there? no? just me? OK then). Since April fool’s day Brent is up 9%. Impressive. The only fool at the moment seems to be myself as I still don't really understand why crude is up at these levels. I read that crude stocks have finally reached the 5 year average. Hang on a minute, the whole reason the oil market collapsed when news of the "glut" came about was because there was so much oil compared to previous years. So, if oil stocks have finally reached levels compared to the 5 year average then how is it a good thing? Let me put it this way. Say 5 years ago I weighed 80kg. 5 years later I weigh 160kg but during the last year I have managed to lose 2kg. Is that 2kg something to be happy about? No, I'm still as fat as an orca and I need one of those stair lifts like Thora Hird just so I can go to bed. Like I said yesterday, none of it really matters. All that matters is that OPEC are high fiving each other about reaching this milestone and the bulls concede, roll over, have their tummy tickled and buy as much as they can accordingly. I will acknowledge (if Goldman's are to be believed that is) that demand does looks rather good. I just wonder though, if prices continue this relentless ascent will the end users be there as gleefully as they apparently were in Q1? I'm happy with 6th by the way for any red Devils fans...Be seeing you.