Daily Oil Commentary

Brent closed Friday up 0.88 to $75.33 and WTi closed at $71.01 up 0.68.

Brent closed Friday up 0.88 to $75.33 and WTi closed at $71.01 up 0.68. Congratulations to France on a much deserved World Cup win. I wonder if Giroud and Pogba will turn up with quite the same intent for their respective EPL clubs in the coming season or if they will revert to ensuring their latest hair cut stays intact. Brent seems to be happy to flirt around this $75 number as it has done for quite a while now, but this week could be one to break us out of this $7 handle I think. I'd love to be a fly on the wall when Trump and Putin meet later. Both translator's will probably look at each other after each response and say, "Did he really say that?". Haha. I wonder if the politics will be kept at translator level if I'm honest. The oil market will be keeping a close eye on any talk of increasing oil production however. Both the US and Russia have clearly said that they are ready to increase production as and when necessary. Last week signified quite the milestone for the US oil industry, oil product imports were at a 3 decade low and crude oil exports were at 3mb/d, the highest figure ever. In 2005, US weekly net imports peaked, routinely topping 13 mb/d. Now that figure has plunged to less than 2 mb/d. I'm not saying that the US still isn't heavily reliant on imports, the grades of crude the AC and GC refineries run are not really suited to the light bbl the US produce but with each passing weak the US are becoming more and more intrinsically part of the global oil trading network. Good day and week to all.


Daily Oil Commentary

Brent closed up 1.05 last night to $74.45 and WTi closed down 0.05 to $70.33.

Brent closed up 1.05 last night to $74.45 and WTi closed down 0.05 to $70.33. This market seems about as fragile as Antonio Conte's Chelsea reign right now. Yesterday crude oil spent more time bouncing up and down than that uncanny Donald Trump balloon making its way around London. Try as they might, and I have to take my hat off to them as they try it every single month, the IEA kept the bulls pacified with a fairly woolly report apart from the fragile state of world oil production. OK mate, whatevs. In all seriousness and without me dismissing the IEA like a petulant child, I genuinely do not see a reason why people are saying that the world is running out of oil all of a sudden. Park Iran and Venezuela for a moment; US oil production in July 2016 was 8.45mn bpd. US oil production in July 2018 is 10.9mn bpd. 2.45mn bpd more than they were producing 2 years ago! Chinese demand is faltering, and Singapore bunker levels were lower last month by 2.5%. Sooner or later the pinch of higher prices is going to be felt by the consumer and demand will, inevitably, falter. Only if the IEA, or whoever comes up with these frankly, hawkish and incorrect demand forecasts, are justified will there possibly be a chance of a supply problem but until then I will maintain my $60 bid. Have a good weekend.

Daily Oil Commentary

Brent closed down 5.46 last night to $73.40 and WTi closed at $70.38 down 3.73.

Brent closed down 5.46 last night to $73.40 and WTi closed at $70.38 down 3.73. I thought long and hard about what to write this morning. Do I lambast the England team for a pretty poor performance and missing out on their best chance to reach a WC final in 30 years? Do I ignore the fact that England lost and bury my head in the sand? Should I regret buying 4 Navy waist coats from M+S that I'm never going to wear or fit in to? Or should I commend a young football team who have played very well and surprised everyone, not just in the UK but globally, on a fine WC performance and that has united a Nation that has had a pretty rough time of things over the last few years? So, I thought I'd say all of them. Well done boys, we are proud of you. Numpties. Anyway, moving on to other disappointments - this oil market. LOOK OUT! I mean I know I said yesterday that I was worried about the state of the market and about England's chances but wow that was some drop last night. The biggest in 2 years in fact. EIA data showed a huge 12mn bbl draw on crude but there were modest draws on gasoline and builds on distillates. Gasoline demand was also down over the 4th July holidays so couple this with a relentless tirade of his most Orange of President's in the trade war spat and that serves up a pretty big reason to sell crude that even Mr Andurand can't justify spinning in to a hawkish tweet. I'm reading that another reason for the sell off is that force majeure in Libya has been lifted. I'm sorry but Libya is, and has been in a state of peril for some time now so any production increases or decreases should not be priced in. When are people going to finally realise that there is actually plenty of oil, production is increasing (Venz aside) and that demand is not as good as every one initially forecast? Never probably. Sigh. It's not coming home. Have a good day. If anyone can remember what one of those actually feels like. Sighs again.

Daily Oil Commentary

Brent closed last night at $78.86 up 0.79 and WTi closed up 0.26 to $74.11.

Brent closed last night at $78.86 up 0.79 and WTi closed up 0.26 to $74.11. 28 years ago I remember sitting in my friends front room, wearing a splendid Umbro shell suit, I had just bought Vanilla's Ice version of the theme song to "Teenage Mutant Ninja Turtles" and I was eating an Italia '90 themed Findus Crispy Pancake. We lost to Germany on penalties and I will never quite experience disappointment like it. Saying that, this oil market isn't far off it. On the 11 July 1990 Brent crude oil was trading at $16.07. !!!! Fundamentally though what has really changed apart from those days of oversized shoulder pads and Filofaxes? Wwell not a great deal really. Granted, the world is full of more people and the number of vehicles on the road has dramatically increased, but can it be realistically be argued that crude is worth $62 US dollars per bbl more now than then? I suppose we will never really know the answer to that. Brent continues to trade in this $75-$80 range and I think it is only a matter of time before Trump has his way and the Saudi's agree to raise production to ensure prices stay at a level both administrations are happy with. All eyes on EIA data later as the 4th July holidays will prove crucial to show evidence that driving season is as strong as everyone was hoping it would be. Expect to see draws on crude and Cushing levels with the Canadian pipe still shut in. What more can I say apart from, gulp. It's coming home......right? Good day.

Daily Oil Commentary

Brent closed up 0.96 last night to $78.07 and WTi closed at $73.85 up 0.05.

Brent closed up 0.96 last night to $78.07 and WTi closed at $73.85 up 0.05. As World Cup fever and the weather in the UK hit boiling point I can't help but worry. We English are a unique bunch you see. Take the Royal wedding for example. What other country in the world would you see people camping on the side of a street for 2 days with no regard for personal hygiene to see a ginger bloke marry a TV star? If England don't beat Croatia tomorrow and it starts to rain on Wednesday and the inevitable rush hour cock up occurs can you imagine the almighty hangover the UK is going to experience? What if there are builds on crude and products as well via EIA data? Brutal. Like I said, I'm worried, but readers of this commentary will know that I am forever a pessimist and forever a bear, I said this market was a sell at $45 so what do I know!! I'm reading that a possible strike in Norway is causing this market to spike on the back of "possible supply disruptions". Hmmm. Knowing how efficient the people of Norway are I imagine they will strike for 3 minutes, come up with a very thorough agreement and be back to work before you can even say picket line. The bulls will jump on any news though and crude is trading up this morning. The bulls also ignored comments from HE Al Mazrouei yesterday that the UAE can "easily increase production by 400-600,000 bpd". Ignorance is bliss I suppose. Belgium vs France tonight, a good one for the neutral. And being an English fan all I have to say is, Vive La France! Good day.


Daily Oil Commentary

Brent closed Friday down 0.28 to $77.11 and WTi closed up 0.86 to $73.80. Well slap my leg and call me Gareth.

Brent closed Friday down 0.28 to $77.11 and WTi closed up 0.86 to $73.80. Well slap my leg and call me Gareth. In fact, forget that, it is Sir Gareth. England only went and did it. The first semi everyone in England has had for nearly 30 years.......ahem. What will Wednesday bring us though? And no, I don't mean will Croatia beat us, I am referring to EIA data. At the moment all eyes are on Cushing and the fact that owing to the Canadian crude outage has perhaps skewed the outlook on storage levels there. The front 2 WTi spreads certainly evidence a tightness in supply but normal service will, apparently, resume at the end of July. Keep your eye on this. Also keep your eye on Beryl. No, not your mates mad Aunt Beryl, but Hurricane Beryl in The Caribbean. Actually, keep your eye on hurricane season with the same beady eyes as Jordan Pickford as the mere hint of the USGC oil system going down is more than likely going to yield in prices spiking upwards towards $85. Eeeek. In other news the trade spat between China and the USA seems to have largely been priced in as Equity markets shrugged it off like the Brazilian welcome home party. Brexit rumblings carry on in the same embarrassing way as they have done for 2 years. But who cares? It's World Cup Semi Finals week and I was a believer all along! Honestly I was.... Good day.


Daily Oil Commentary

Brent closed last night up 0.46 to $77.76 and WTi closed at $74.14 up 0.20. Wow.

Brent closed last night up 0.46 to $77.76 and WTi closed at $74.14 up 0.20. Wow. We like to do things the hard way don't we? Talk about drama! And complete unnecessary drama as well! Nope I'm not talking about OPEC+, I'm talking about the England football team. Only the Brits could go absolutely nuts about making the quarter Finals and say, "well done lads, the worse we can come is 8th". Harsh perhaps but I have a feeling that cheap breakfasts in the Thurrock branch of Ikea may be boycotted if the Swedes have their wicked way on Saturday. Moving on, expect a quiet day today with the US off celebrating Independence, the UK nursing a hangover, Africa and the Arab world saying, "how come NONE of us made it through?!!?" and Asia not sure what to do with themselves as there's no football tonight. The Brent market remains firmly stuck in a 75 - 80 range, as it has done for the last 2 months more or less and apart from some real bullish demand data coming through over the next few weeks I do wonder if $80 is the top of this market. I suppose it depends on the next few days and just how committed the Griswold’s are on driving to Walley’s World and back. EIA data out tomorrow. Enjoy your apple pie. Good day.

Daily Oil Commentary

Brent closed last night down 1.93 to $77.30 and WTi closed at $73.94 down 0.21.

Brent closed last night down 1.93 to $77.30 and WTi closed at $73.94 down 0.21. A fairly sharp reaction last night to the ever-growing tension between OPEC+ and Trump. I have to take my hat off to Trump, even though he does sometimes act like a complete buffoon, he is unrelenting in his pursuit of making America great again, love him or loathe him, he is at least standing up to his initial pre office policies. Why does he see a need for OPEC+ to raise production? Well prices are too high and are affecting the consumer. This is bad for demand which is bad for the economy. This then affects oil demand in the rest of the world which is bad for global growth. Quite why the rest of the market doesn't see this and wants to keep oil up at these prices is one of life’s great unanswerable questions. A bit like what do vegans say when they are having their photo taken? Think about it. I still don't know whether $80 can be seen as the "ceiling" on this market but try as it might to push past $80 is met with the same resistance as the Russian back 4. Or back 10 if you watched them play on Saturday. Libyan supply disruptions are causing the market to still think that perhaps there will be a shortage of supply, but Libya is constantly in a state of peril so, personally, I would discount this from any supply production data anyway. ADNOC and Saudi are both more than capable of producing more bbls and it looks like the North Sea is also looking to crank things up, couple this with a 30% increase in US oil production over the last 2 years and the word "shortage" might soon be replaced with, dare I say it?  Glut? Right, for all of those of you who are still in the World Cup, and it's not many of you, England are playing tonight. Park your love of anything Latin American just for 90 minutes tonight, sit back, think of the Queen and wear those 3 lions with pride. COME ON ENGLLLAAANNNNNDDAAAAHHH. Good day.


Daily Oil Commentary

Brent closed Friday at $79.23 and WTi closed at $74.15.

Brent closed Friday at $79.23 and WTi closed at $74.15. Don't cry 4-3 Argentinaaaaaaahhhh, the truth is you'll never Mbapppeeeee. Sorry, couldn't resist. What a weekend if you're a sports fan eh? No Portugal, Spain, Italy, Netherlandsshh, Argentina, Germany or the mighty Iceland are in the World Cup. The door is ajar boys...anyway moving on, this oil market. So, Trump had one of his Trump Twitter Tourette Tirade's at the weekend and this particular TTTT was about the oil price. Again, it concerns me greatly that the only other outspoken voice about oil prices being too high apart from yours truly is the right honourable Donal trump, but before I dwell on that and contemplate a life of solitude, I can't help but think why everyone else isn't agreeing with him? He has asked Saudi Arabi to increase production by 2mn bls as higher prices are, ultimately, going to affect demand and thus affect the economy. It seems however that Saudi Arabia were ahead of the curve as apparently Saudi pumped an additional 700kb of crude in June. How convenient that this figure has been published post the OPEC meeting. The elephant in the room however is why the rest of the major oil producing countries aren't asking the USA to produce more? Why is that? Is it like an unspeakable truth? Is it like saying Voldemort in the middle of Hogwarts? The US have proved over the last 2 years that they are more than capable of increasing production by a substantial amount in order to fill any drop in production from elsewhere. Am I the only one that sees that? Covfefe? Good day.

Daily Oil Commentary

Brent closed last night up 0.23 to $77.85 and WTi closed at $73.45 up 0.69.

Brent closed last night up 0.23 to $77.85 and WTi closed at $73.45 up 0.69. This market is like last night's England performance, everyone was excited at the beginning, then you realised that it was business as usual and even though certain people had tried to change things to make it more interesting all you really need is a Harrykane to be thrown in and everyone is happy! Brent has performed relatively well this week in a week that has been somewhat turbulent for other markets. It is surely only a matter of time before oil starts to feel the pinch from looming trade tariffs and a general poor macroeconomic outlook. I can't even bring myself to say Brexit, that's how bored I am of it. Brent has rallied since this morning's dip, probably some profit taking as I can't see any genuine reasons for a pop on Brent. Saying that have there been any REAL reasons for Brent to have a pop over the last few days? OPEC have announced they are producing more, Iran has more or less been priced in, Venezuela is a disaster and has been for some time and those can't see it must wake up in the morning and think they are an onion, and the US are getting ever closer to becoming the world’s top crude oil producer. Bullish indeed....not. In other news, the last 16 of the World Cup starts tomorrow so it gives every bloke in the world chance to go home and see their families after 2 weeks of non-stop football. See you in the pub tomorrow. Good weekend to all of you.

Daily Oil Commentary

Brent closed last night at $76.31 up 1.58 and WTi closed at $70.53 up 2.45.

Brent closed last night at $76.31 up 1.58 and WTi closed at $70.53 up 2.45. I haven't used this in a while, but I feel that there is no better way of summing up the oil market right now than to quote dear old Dick Cheney, "...As we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don't know we don't know.". Right on Dick. It is perhaps weak or naive of a daily commentator on the oil market to reuse previous quotes but as much as I think the above paragraph is absolutely nuts, there is something that is, quite frankly, absolutely brilliant. Let’s face it, there isn't much of a story to the bearish side of this market at the moment and I can hear the mankini laughing at me in a sinister way from inside my desk drawer like Jaafar from Aladdin. If we look at the way the market has reacted so far this year to any news of a bullish nature then the next few weeks could really see us to test the upside of, (dare I say it?) A hundred bucks again? EIA data will no doubt show a significant draw on both crude stocks and Cushing inventories owing to the Canadian pipeline outage. If gasoline stocks show a healthy draw as well then the demand argument is now fully justified. Sanctions on Iran are only going to be supportive for Middle East grades as Trumpy is not letting up in any whatsoever. Grim if you're a consumer. And we are all consumers. I'm still a bear but I'm one of those tiny ones you win at a raffle that nobody else wants. Grr.....just about. Good day.

Daily Oil Commentary

Brent closed last night at $74.73 down 0.82 and WTi closed down 0.50 to $68.08.

Brent closed last night at $74.73 down 0.82 and WTi closed down 0.50 to $68.08. This market looks like it is more confused than a world cup football referee reviewing a supposed handball incident. $75 seems to be a nice little round number for it to sit idly by and not do a great deal. All that seems to have really yielded from last weekend's OPEC meeting is that they now have a + next to their name. OPEC+. It sounds like a headache pill. "Constant migraines owing to the oil market? Try OPEC+ today!" Stupid. I'm not really sure what the market is waiting for if I’m honest. I can only assume that as we are approaching the end of Q2 and halfway through the year (wow already?), that people will actually say, right I heard about all this amazing demand, so let's review how that has been so far. There are a few people saying that we are going to enter a phase where supply is tight. BofA are saying that they expect prices to get to $90 by Q2-19 (the mankini offer expires by then boys!). I don't see how supply is tight at all. Quote "Saudi Aramco Chief Executive Amin Nasser says the company has spare capacity of 2 million barrels a day and can meet increased oil demand in the event of any supply interruptions." Unquote. Ermmm, supply problems? In other news, the Football World Cup is entering a crucial period and Argentina are in real danger of being eliminated. Maradona is apparently "furious". Careful of those wagging hands Diego, we all know what they can do....#neverforget86. Good day.

Daily Oil Commentary

Brent closed Friday up 2.50 to $75.55 and WTi closed up 3.04 to $68.58. A nation in shock.

Brent closed Friday up 2.50 to $75.55 and WTi closed up 3.04 to $68.58. A nation in shock. No, not any of the OPEC nations regarding Friday's meeting but I'm talking about England. At the end of yesterday's match vs Panama there was this strange hush that filled the pub I was in. Could England really do it? Is Gareth Southgate the next Alf Ramsey? Is my new mancrush, Harry Kane, going to be everyone's hero? Ten minutes later normal service had resumed, everyone had another drink and realised we'll probably get spanked by Belgium and lose in the next round. Ahhhh, that good old "Happy that we took part" English attitude, eh? On to other promising but will ultimately end up in an epic fail current stories - this oil market. So, I don't know about you but I'm not too sure what ACTUALLY happened at the OPEC meeting on Friday and Saturday. Yes I know they have agreed to raise production. But I'm not sure how and by whom. Listening to the OPEC ministers speak was like listening to a press conference by Jose Mourinho, it makes sense but not directly vs the question he is being asked. "Jose, what did you think of today’s performance", "Yes I was the special one and I still can be, like bull running down street". Ermmmm, ok thanks Jose. It turns out that Jose's bull wasn't the only one running down the street on Friday and we closed up. Big styli. Mission accomplished as Mr Barkindo would call it. Unfortunately not it would seem. You see, this market isn't quite as stupid and fickle as it would have you believe, even though the market welcomed the news on Friday that OPEC will apparently still keep a lid on things somewhat, it is apparent that there is still too much oil around. We may have a $6 handle on this market soon enough. Good day and week to all.

Daily Oil Commentary

Brent closed last night at $73.05 down 1.69 and WTi closed at $65.54 down 0.68. What has the week bought us?

Brent closed last night at $73.05 down 1.69 and WTi closed at $65.54 down 0.68. What has the week bought us? Well if you're an Argentinian football fan then things are about to get very messi, if you're an England fan then guys, get your Panama hats at the ready for Sunday but what about the oil market? Well, week on week Brent is down about 4%, could have been a lot worse I suppose and at the time of writing Brent is up a buck to $74.05. Not bad. However, OPEC either got the dates wrong on their meeting, ("hang on a minute, who said anything about meeting on a Saturday?!! I’ve got a tee time booked for 2.15!!" (cried one OPEC minister), or they have pulled off a genius stroke by delaying an announcement which is bound to be of a bearish nature when the markets are shut. Dangerous game that however, it's like going to the pub when you KNOW if you do you will be in the dog house. We’ve all been there. Quite why we're roofing today is anyone's guess but this oil market is deep down a big cuddly teddy bear, even though it looks like a 22 stone cauliflower eared giant, people are claiming it is because of "Uncertainty around the OPEC output agreement". Pah, look I don't care who anyone in that room thinks they are, Saudi and Russia rule the roost and even though there may be some negotiating to be done, at the end of the day those 2 countries have a) taken it upon themselves really to lead at the front regarding compliance and b) have the ability to crank up production to 11 PDQ, regardless of what you might read to the contrary. The reason we are up this morning is because the market is going to come off later on when Vienna finishes eating fondant fancies and drinking that expensive coffee that odd cat makes in Indonesia, buy it in the morning, sell it in the afternoon. OPEC trading 101. Press conference scheduled for 1300 BST, so delay the pub until after that. Enjoy the weekend and COME ON ENGLANDDDDDDDAAAHHHH.


Daily Oil Commentary

Brent closed last night down 0.34 to $74.74 and WTi closed at $66.22 up 0.37.

Brent closed last night down 0.34 to $74.74 and WTi closed at $66.22 up 0.37. Well it seems fitting that Summer solstice is upon us and the longest day of the year is more than likely to mean to mean the longest meeting of the year in Vienna. The market seems like it is stuck between a rock and a hard place and quite frankly, I don't understand why. Granted, I don't understand many things, like why Greece has never been able to produce a major winning professional golfer, why is that? Or why we don't eat Turkey eggs, surely they would be better for the environment than everyone eating chicken eggs? But alas, some things are just not explainable. EIA data was a bit odd last night, sizeable draws on crude which yielded in higher product inventories owing to a 1% rise in refinery utilisation. Refinery utilistaion in the US is at a mahoosive 96.7%, about 4% higher than this time last year. The worrying thing however is that gasoline demand was down 0.5mnbpd. I know driving season isn't in full swing but is everyone getting a Tesla driven Uber or what? I'm sure we have a volatile day in front of us as rumours and tweets circulate throughout the course of the next 48 hours. All eyes on Vienna. Good day.

Daily Oil Commentary

Brent closed last night at $75.08 down 0.26 and WTi closed at $65.07 down 0.78.

Brent closed last night at $75.08 down 0.26 and WTi closed at $65.07 down 0.78. Like a Colombian defender, this market looks interesting for all of about 3 minutes.  I mentioned a few weeks ago that we will more than likely flirt around the $75-$80 level in the build up to the OPEC meeting and at the moment we are trading around the bottom of the range, I think however that there is definite room to the upside over the course of the coming days. It is looking more and more likely that this week’s OPEC meeting is going to be one of the most difficult meetings OPEC has had for a while, fractures have opened up within the cartel that actually hasn't been a particular issue between themselves, but that of Mr Trump and his administration with regards to imposing sanctions on both Venezuela and Iran. I've got an idea boys - why don't you send Mr Trump one of those gold plated envelopes with an invitation for the USA to join OPEC? If you all want cohesion and a "fair market" then why try and fight the world's second biggest producer and second biggest consumer? Why not invite him to your biannual meetings? Like it or not dearest members and excellencies of OPEC, the US are the giant, wig wearing, can't speak properly or put his fingers down when he does talk, elephant in the room. As Ghandi once said, “It is easy enough to be friendly to one's friends. But to befriend the one who regards himself as your enemy is the quintessence of true religion. The other is mere business.” Food for though. Oh, stats later, who cares when APi are always so wrong? Good day.