Daily Oil Commentary

Brent closed last night at $71.62 down 0.10 and WTi closed at $63.76, down 0.29. Seeing as it's Easter my commentary is like a Cadbury's cream egg today, short and sweet. For some stupid reason crude is holding its own even though oil inventories shrunk lower than forecast, however I shall not despair, far from it! In the spirit of Easter, I say this - I shall look forward to new beginnings, to baby chicks, to mighty oaks growing from tiny acorns, to a new lease of life in the oil market, to never knowingly becoming grumpy, to a new diet, to long summer evenings and warm weather. Wait a minuteeeee, is Brent at $71.50 again? Forget what I said, I'm off to go and live under that bridge again. Enjoy Easter with your families, and don't eat too much chocolate. Be seeing you……

Daily Oil Commentary

Brent closed up 0.54 last night to settle at $71.72 and WTi closed at $64.05 up 0.65. One of my daughter's favourite books, in fact all of my daughter's actually, is Winnie the Pooh. Last night I made up a story about Winnie the Pooh and as I spoke some nonsense, I couldn't help but compare the oil market to AA Milne's work. We have Pooh himself, who is akin to Mr Trump, not really sure what's going on but stubborn, and likes to eat a lot. We have Tigger, who is bouncy and reactive, just like OPEC+. We have Eeyore. Which is me. We have Christopher Robin, who is a posh boy who talks to himself, like every loony commodity fund in the world who speak to their own hands. We have piglet, who runs around so scared all the time that he is like those poor bulls who try and catch their tail every day. Now, you might think that I have lost the plot, and perhaps you'd be right but let's face it, the rhetoric this year has been boring, OPEC+ cuts and Iran and Venz sanctions vs US increased oil production. That's about it. Demand signals are about as confusing as why dyslexsic disklexic dyslexic is so hard to spell. China is apparently back but when were they ever not? The market certainly didn't react during Q1 to any bearish Chinese demand indicators. Hello APiiii. They reckon we will see a draw on crude stocks later today and apparently this is good news, even though US oil production is at a mahoosive 12.2mn bpd for the second week on the trot. Hmmm, let's wait and see. Good day to all.

Daily Oil Commentary

Brent closed last night at $71.18 down 0.37 and WTi closed at $63.40 down 0.49. I made a point yesterday about how Q1-19 was, in general, a very positive one for the global economy, especially the commodities sector with oil leading the way. Q4-18 seemed to take everyone by surprise and Q1 quickly rectified that in the same way that Ole Gunnar Solskaer has rectified Manchester United. But let's face facts, as much as Ole might be viewed as leading a charge in Man Utd's fortunes, they are still 6th in the Premier League (exactly where Jose left them), got kicked out of the FA cup by that behemoth of a club, Wolverhampton Wanderers, and are going to be kicked out of the CL later tonight. Oil is exactly the same, we have started Q2 in the same frame of mind, nothing has changed fundamentally but the market has the same hope it had at the end of September. OK we can argue that Iranian sanctions have taken some bbls off the market, but the other bullish factor seems to be Venezuela, and they have been in a state of peril for about as long as I can remember and it was a matter of time before their crumbling infrastructure came home to roost. US oil production (albeit a different crude slate, granted) has more than filled every conceivable void left by geopolitical issues and OPEC+ cuts. I am surprised how long it has taken to be honest for a minister of OPEC+ to come out and say that perhaps they are getting a bid fed up of cutting production so that flat price can go up only for the US to snap up market share from the very people who have cut production. I sense a divorce in sight, and no divorce is ever pretty. Good day.

Daily Oil Commentary

Brent closed last Friday at $71.55 up 0.72 and WTi closed at $63.89 up 0.31. Easter is upon us, well nearly, and I am going to tell you the same story I told you this time last year. The saddest thing I have ever seen in my life was when I was driving down my local high street many years ago, I spotted an old lady walk out of Woolworth's with 2 plastic bags rammed with Easter eggs. As she dithered around one of the plastic bags broke and around 5 Easter eggs rolled off the pavement, on to the road and were run over by a bus. It was harrowing to watch and was the saddest thing I had ever seen. That was until I saw this oil market. $71.50 per barrel? Really? I mean I know I have been away for a week but it's not like I've come back to any new news, is it? In fact, I would say that exactly nothing has changed, and nothing has really changed at all since his Royal Trumpness decided to sanction Iran and Venezuela. Oh, sorryyyyy, one thing has changed, since Trump has been in power US oil production has increased by 2.981mn bbls per day, or 32%, but everyone else is ignoring that so maybe I should jump on that ignorant, delusional, blissful bandwagon as well. On that note the rig count rose last week for the first time in a while. Funny that eh, considering Q4 prices were down 30pct but Q1 prices were up 30pct so retained earnings in Q1 for Jiminy BillyBob Drilling Inc soared and now they are stable they are looking to take advantage of higher flat price. Some people say I'm cynical, I disagree. What else is going on? GUESSS WHAT!!??!! Brexit has been delayed!! Shock. Keep your eyes on Q1 earnings. Good day, and week to all.


Daily Oil Commentary

Brent closed last night at $69.37 up 0.36 and WTi closed at $62.58 up 0.99. That Brent/WTi spreads seems to be ever shrinking, keep your eye on the WTi curve, she moving to backwardation fairly rapido. On to other nonsense - this oil market. In fact, there is quite a lot of nonsense around at the moment, isn't there? This Brexit debacle is just one catastrophe after another. However, I have to say that I cracked a smile when I heard that in that plucky Brit way that only we know how the rules of yesterday’s cabinet meeting were "No phones, just lunch and wine". Ha! So basically, the PM is waking up this morning, rubbing her forehead and saying to her husband, "Please don't tell me I called Corbyn and asked to meet him, pleaseeee". Haha. Ohhh the anxiety. Anyway, on to other anxieties, let's talk to the oil bulls for a moment, shall we? So, I read this morning that the US are contemplating shrinking their oil reserve. I mean surely this was a matter of time, currently the US are the world’s biggest oil producer, but they have 649 million barrels clogging up some prehistoric salt caverns in Texas. That is quite a lot, but everything's bigger in Texas as they say. However, Rick Perry has a point, why are such huge reserves needed when they are now self-sufficient? What did the market did with this news? Rally of course! Because a potential 100mn bbls of SPR bbls entering the market is a good thing, you wally. Oh, and apparently there is going to be a draw on EIA inventory later. So, another reason why we’re trading up. Honestly, I give up, I think it's about time I pack this oil lark in and become a chicken farmer or something. Or even try and join one of those cabinet lunches? Much the same I reckon. Keep your eye on cable. Good day.

Daily Oil Commentary

Brent closed last night at $69.01 up 1.43 and WTi closed up 1.45 to settle at $61.59. Welllllllll thennnnnn, where are we heading on crude? $70 is a definite now but next stop, $80? The rally is insatiable, and it is certainly not driven by the fundamentals. The market spiked last night on "news" that the US will more than likely pull some sanction waivers next month. However, if you do just a smidgen bit of research you will find that the countries that will most likely have their waivers pulled (Turkey, Taiwan and Italy) haven't bought a single drop of Iranian oil since they were granted the waivers in the first place. So how does that ACTUALLY change anything? Like I said, it doesn't. What it does goes to prove though is that this market doesn't care if things are real or not, it will jump on headlines quicker than I am jumping on Arsenal's hopes of a top 4 finish. This year so far seems to be the year of ignorance. I'll give you some examples - Theresa may is being ignored by just not just every MP but by her own cabinet as well (good luck in that meeting today boys, you could be in for some serious dog house, "PM May quote "who pays your salary matey??!!"). Trump sending his, quite frankly, adolescent !! tweets to OPEC+ and being waived away like an uncooked chicken and of course the bulls, who ignore the fact that the OPEC+ cuts still don't balance the market when the US are producing so much oil to offset any global imbalances. I thought I was supposed to be year of the pig? Pigs might fly if the bulls change their way, right? Here's a fact for you - the last time it was the Year of the Pig was 2007. One year before the financial crisis. History doesn't repeat itself. Does it? Good day.

Daily Oil Commentary

Brent closed Friday up 0.48 to settle at $67.58 and WTi closed at $60.14 up 0.84. April 1st. April fool’s day. I wonder if the Houses of Parliament will announce something this morning and say, "WE HAVE A DEAL!", thinking they are being really funny when everyone actually knows that are just a bunch of petulant children who don't want to share toys with each other. Anyway, rant over and on to Q2 we shall proceed my oil chums. Hmmm, interesting. Depends on your definition of interesting I suppose. If you like beige trousers and talking about the level of nitrogen in your lawn this time of year then yes, you probably find this market interesting. The rhetoric this year has not waived one iota and why should it? The bulls ignore headlines that even sniff of an economic headwind and every time it sounds like the bears voice is going to be heard they are quickly extinguished like a Jussie Smollett court case. Quite where the rally is going to take us is anyone's guess, I suppose $70 per bbl is the next step and this will please the members of OPEC+ no end, but, as I have been saying for quite a while now, we are perilously close to where higher prices will effect end user demand so I wonder if we will just continue to flirt around the comfort bosom that is $67.50 per bbl for a while longer. The rig count proved once again that the US system is becoming ever more efficient. The numbers of rigs is at a 3 year low but US oil production is still 11.9mn bpd. Let’s not forget that March 2016 the US were producing 9.1mn bpd, shall we? Good day and week to all.

Dail Oil Commentary

Brent closed last night down 0.01 to settle at $67.82 and WTi closed at $59.30 up 0.26. That sweet smell of a Friday, the last of March, the days start getting longer and that weekend where trips up and down the country are being planned to various garden centres. Then you wake up and realise you're a bull in this oil market and have visions of the Knight King all day long. Dark. Look, I told you it was a matter of time before a tourette reaction emanated from his Trumpishness and yesterday proved it. I said last Wednesday that prices were perilously close to a trigger being set off under that mane of flowing golden hair and I thought it would read as follows: "Oil prices high again!! not good!! OPEC+ you must do something!!! We aren't!! But you must!!! Not good!!!!". Now, there weren't quite as many !! but I wasn't far off, his tweet yesterday read "“Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!”. At least he said Thank You I suppose, manners cost nothing and all that. Last Wednesday when I wrote the above, Brent settled at $68.50. Last night we settled at $67.82. So, anything toward that $70 handle it seems Trump isn't particularly comfortable with. Let's see what happens. What else is going on? Well Solskaer has been appointed full time Man Utd boss so expect that to trigger a curse and Man Utd lose every game from now until the end of the season, fingers crossed (sorry Chris). I'll leave you with this from Orbital Energy- “China’s stockpiling continues to drive overall global stock builds, expanding the year-on-year surplus up to 119 million (barrels)…OPEC inventories remain stable to modestly higher and are at a 22.4 million (-barrel) surplus to last year. The EIA reported U.S. refinery runs are 900 million barrels below last year, which does not bode well for the crude demand bulls as margins are compressing despite lower runs as refiners front-load maintenance ahead of IMO 2020.” Balanced market? Hmmm. Good weekend.

Daily Oil Commentary

Stop it, I'll blush. Brent closed last night at $67.83 down 0.14 and WTi closed at $59.41 down 0.53. Another enthralling Fujcon is out of the way and is everyone in the fuel oil market that much clearer now on 2020? Thought so. Brent has been about as interesting as watching "The World's best fences; extended edition", we are stuck in a range that at the moment, is going to be difficult to be shifted unless something drastic happens. The market is ignoring economic headwinds in the same way I ignore a vegan who says, "Cauliflower base pizzas really are like the real thing you know". Bore off. Stats were out last night and they "surprised" us by showing a draw, read in to that what you will but the market right now only cares about OPEC+ cuts, Iran and Venz sanction and US-China trade talks, quite what the market will do once those 4 factors are remedied is anyone's guess, the next excuse I suppose because you can be darn sure this market is not being driven by fundamentals. *sighs* However, saying all this negative talk, Brent is on track for its best quarter in a decade so who needs fundamentals eh? In other news - Brexit. I mean I am really starting to feel sorry for Theresa May. Yesterday she offered her resignation, and nobody even took any notice. She must just want to shout from the top of her lungs "CAN ANY BODY HEAR MEEEEEEE!!". If I was her, I'd threaten something, "right, listen you lot, I will tell the HP bar staff to stop serving you beer unless you try and bloomin' agree on something with me!!". That'll get them going. Perhaps there's a political career in me yet? Imagine that…..Good day.

Daily Oil Commentary

Brent closed last night at $68.50 up 0.89 and WTi closed up 1.20 to settle at $60.23. Ahhh, WTi at $60 per barrel and Brent approaching $70, Spring is on the way, no more interest rate hikes for a while and the first BBQ of the year can be smelt in the distance. Happy days, right? EEEEEEEE (Family Fortunes wrong sound). Wrong. Listen, you may have noticed recently that I have tried to soften my bearish tone recently, lest we forget Mankini bets in a previous life, but my outlook is still the same.  I'm far too long in the tooth now to be persuaded by bullish hopes that demand is really that great in a global economy that is spluttering, and that the world is running out of oil. In my view the market is resting on one thing, and that is Saudi Arabia led production cuts with some new allies. In the last 2 months of 2018 the US Gulf Coast exported more than it imported. Yet the market reacts in that fickle way it knows how to when EIA data is released, last night proved the same. I mentioned at the start of CERA week last week that US energy policy now seems to play hand in hand with foreign policy - this was evidenced when Pompeo's speech summarised with "… America’s new-found shale oil and natural gas abundance would “strengthen our hand in foreign policy.”. US oil production is at 12.1mnbpd. A global record. USGC imports in December were at a 32-year low. You see where I'm going, right? Oilganda we shall call it. And it's coming. Just like winter, your grace. Moving on- apparently, it's all their fault and nothing to do with me guv. Or so PM May said at least. Keep your eye on cable. Good day.


Daily Oil Commentary

Brent closed last night at $67.61 up 0.07 and WTi closed down 0.06 to settle at $59.03. Well you'll be pleased to know that after one day of chronic man flu, I managed to survive, and normal service has resumed. Phew. Right, what's going on? Well, not a lot really. Brent continues its climb to $70 per bbl, but it's hardly one of those energetic Bear Grylls type climbs. More like one of those climbs a fat bloke is trying to make up a ladder to change a lightbulb. Slow and dangerous. I suppose we are getting to a point now where prices are at a point where, A) Consumers will start to feel a bit of a pinch so this may dent demand and B) Twitter explodes from the sheer level of !!!! from Trump to OPEC about high oil prices, perhaps something like this, "Oil prices high again!! not good!! OPEC+ you must do something!!! We aren't!! But you must!!! Not good!!!!" CABOOM. Anyway, moving on. Stats are out later and apparently, we will see another draw on crude and products. Niceeeeee. If you care to believe them, the net increase of crude oil so far this year (according to API) is +1.5mn bbls on crude. Some would argue that is a balanced market. I'd argue can APi data be used to evidence that, not out of belligerence but just that the market only reacts off EIA data. Maintenance season is around the corner so let's see how the next few weeks pans out. What else is going on? Brexit rumbles on. I'm pretty sure soon PM May is just going to throw her pen down and say, "You know what, forget it, you're all jokers in this house, I'm going to the pub". Fair play. Keep your eye on cable. Good day.


Daily Oil Commentary

Brent closed Friday at $67.16 down 0.07 and WTi closed down 0.09 to settle at $58.52. I hope everyone had a nice, relaxing weekend and you didn't indulge too much in to what St Patrick would you have believed is the way to celebrate the 17th March. But, of course, you're all too sensible so of course nobody goes big on a Sunday, right? As things begin to unravel for Ole Gunnar Solskear I wonder if the same can be said for this oil market. The market sits in limbo as it searches for direction like poor Alexis Sanchez. Over the weekend we had H.E. Khalid al Falih stating that there is still work to be done and that the cuts may have to be extended in to the second half of the year. Such a statement can only have been to hopefully trigger a rally so that, indeed, extensions of the cuts will not be needed. However, Mr Novak quickly doused any bullish flames and said that it's too early to opine on such extensions, or even discuss them when OPEC+ are due to meet in April. With a sensible cap on you would have to agree with the latter but the bulls in this market don't seem capable of ever wearing a sensible cap so I wouldn't be surprised if we see some reaction to the upside of $70 this week on the back of another hint towards extension cuts. I do think though that as we approach 2020 and the pending IMO sulphur emission caps to 0.5% that the Brent/WTi spread will get ever wider and more physical players will start entering the crude market. The world just can't quite produce what next year’s shipping market will need with the Permian's finest light, sweet barrel. One to keep an eye over the next few months. In the meantime, expect technical boredom to rule the roost until we see another headline out of Baku. Good day and week to all.

Daily Oil Commentary

Brent closed down 0.32 last night to settle at $67.23 and WTi closed up 0.35 to $58.61. There are times when all the rubbish I write about the oil market is put in to perspective and analogies don't matter. The tragic events that happened in New Zealand today shake me to my very core. I pray for the victims, I pray for their families and I pray such disgusting and abhorrent events like this are things of the past. #NZ. Good weekend.

Daily Oil Commentary

Brent closed up 0.88 last night to settle at $67.55 and WTi closed at $58.26 up 1.39. So, another Wednesday came and went and another set of confounding data from the EIA was received. Received quite nicely by the bulls, actually. The same kind of reception every Arsenal fan will hope Tottenham Chokepsur will finish the season on. Crude and gasoline showed healthy draws of around 4mn bbls each and distys was up marginally. Lovely. And of course, all the talk is about how balance is finally on the path to achievement. Ahem, really? Look I get that Venezuela production has collapsed and that Iran sanction waivers are around the corner but if we put aside all that and focus on reality US oil production is up 2.1mn bbls in the last 2 years. The OPEC+ cuts are what? 1.2mn bbls per day? Again, I fear that this rally is one of hope and optimism not via fundamental facts, but we shall see, I'm pretty sure $80 per bbl isn't far away then can you imagine the pure level of !!!!!! via Trumpy's tweets? Wow. I'm not sure the 280-character tweet cap will be enough. Anyway, what else is going on? Oh yeahhh! Brexit……bored. I mean talk about putting your dirty laundry out to dry right? The whole world is watching what UK parliament do and quite frankly the world is probably summarising that there are 650 fairly large, red faced members of parliament who talk with a posh accent and have silly long names like Harold Scracthit-Stickleback-Bunsenburner causing all kinds of chaos and shouting "yarrrr" every time someone gets up to speak. Madness. Anyway, on it rumbles and cable is following suit, so keep your eye on that. Good day.

Daily Oil Commentary

Brent closed last night at $66.58 up 0.84 and WTi closed up 0.72 to settle at $56.79. I have to be honest, I don't get it. Shock. I mentioned yesterday that I haven't read a bullish headline on the global economy for a while, yet crude closed up close to a buck. In fact, Bloomberg's new GDP tracker showed that global growth is at its weakest since the financial crisis running at just 2.1%, down from 4% mid 2018. I can only assume that owing to the main head line yesterday that Saudi have pledged deeper than agreed production cuts for April that that is the reason we saw a rally. So, in summary, the only thing keeping the market buoyant right now is Saudi Arabia. I wonder if the policy is to cut production as much as is pain free possible until the next OPEC meeting in the hope that prices rise to a budgetary breakeven level and then talk about some kind of OPEC+ cut exit plan without destroying 2 and a half years of hard work. I wish them the best of luck on that one. What else is going on? GOOD NEWS! Brexit haszzzzzzzz…actually, I'm being harsh. MP's will vote on PM May's Brexit later on today after she managed to secure "legally binding" changes. I have to say, fair play to Theresa. I mean she had a thankless task and every day she has come in and given it her best. Plus, she has dealt with more no confidence votes than David Moyes did and she has discarded any criticism like a used tissue. It is very easy to opine on Brexit, especially being a Brit living abroad looking at it from afar, but I have to commend PM May and I only hope today is the start of a resolution on something that has, quite frankly, been a little bit of an embarrassment for the UK. In other news, I really am neutral, promise. Good day.


Daily Oil Commentary

Brent closed Friday down 0.56 to settle at $65.74 and WTi closed at $56.07 down 0.59. Ambiguity. Let's face it, it's what keeps us all going really. The never knowing. Like, what happened to Charlotte Church? Will I ever actually get to marry the twins from ITV's "Fun House"? Did me not watching Arsenal beat Man Utd and Arsenal winning mean I really am a curse on the Gunners? All very very good questions I think you'll agree. However, the level of ambiguity facing the oil market right now isn't quite so interesting. I don't think I read one positive headline over the weekend, apart from perhaps that Saudi cuts in February were deeper than their initial pledge, but are we really saying that the Saudi's are the only thing keeping oil up here? Hmmm.  Again, the US rig count showed a decline, the 3rd straight week of declines in fact, but, as I said last week, production technology is evolving so quickly in the US that the drop in rigs is having no effect on overall production, so I don't see the drops as a bearish factor. Staying over the pond, it's CERA week in Houston this week. I understand that both U.S. Secretary of State Mike Pompeo and Energy Secretary Rick Perry will speak at the conference. Now if that isn't sending a message to the competition then I don't know what is. That would be like Alex Ferguson taking Ole's place last night in the press conference. Big hitters. Perhaps it's irony that there will be no Saudi Aramco representation in Houston. What's that famous saying? Oh yeah - keep your friends close but your enemies closer. Now, I'm not saying the US and Saudi are enemies, far from it, but the market share battle is heating up, and it may just be decided over one of those 72oz steaks. Eat the lot and you get it for free. Keep your eyes on the news from the Lonestar state. Good day and week y'all. #oil