OPEC compliance 110% in Sep for 12 members with quotas: Platts survey

Daily Oil Commentary

Brent closed last night down 1.70 to $70.76 and WTi closed at $65.01 down 2.03.

Brent closed last night down 1.70 to $70.76 and WTi closed at $65.01 down 2.03. Jeeze Louise. Not a particularly set of encouraging numbers from EIA last night was it? Well not for the bulls I suppose, any short sellers must be in the pub already. I mentioned yesterday that driving season has been nothing short of appalling and unless the whole of the USA gets in their V8 F150's and decides to drive the Cannonball run I can't see a how the next couple of weeks are going to rescue it. I mention the F150 pickup truck quite a bit and here are some facts for you as to why I do - Ford has sold enough F-series trucks to circle the earth more than three times. Ford sells a pick up truck every minute of every day. MPG in 2010 was 12mpg. Today it is 24mpg. I won't labour this point much more but traders taking a view based on driving season is like going to Blockbuster video to rent a video because you ignore Netflix. It is archaic. Times have moved on, engines have evolved and only become more efficient. Yes, more people might be driving but look at your average taxi? is it still a Vauxhall Omega? No, it is a Prius. The unstable guy behind the wheel is still there but at least he knows what a hybrid is, unlike most traders it seems. Refinery rates are nigh on 100pct in the US, which is crazy considering crude imports were UP last week. I said on Monday that Cushing stocks and the Syncrude pipeline outage are the only real supporting factors atm for crude. Alas it looks like that may be coming back online as Cushing levels were up. Barring a cancellation of the trade tariffs between the US and China I can't see any other reason as to why Brent will drop in to the 6's before the middle of next week. Good luck to Burnley and Good day y’all.

Daily Oil Commentary

Brent closed last night at $72.46 down 0.15 and WTi closed down 0.16 to settle at $67.04.

Brent closed last night at $72.46 down 0.15 and WTi closed down 0.16 to settle at $67.04. Here are some dates for you. 132 days until Christmas. 110 days until the next OPEC meeting. 19 days until the kids go back to school. 515 days until I am the ripe old age of 40. The interesting statistic there though is the date the kids go back to school, why? Because it is also Labour day in the US which marks the end of driving season. Judging by what APi told us last night you can't particularly say it has been a thirsty season in the US can you? All these forecasts of demand going through the roof have been met with the same enthusiasm as watching a Jose Mourinho press conference "eeeh, yes we play, we play like bulls, then we lose. I am special." Thanks Jose. Joking aside gasoline demand in the US has been nothing short of appalling so far this year and stocks are still way higher than the 5-year average. It's not like a hurricane is on its way to blast through the USGC oil system either, it has been the quietest hurricane season in years in the Atlantic basin and without wishing any peril caused by these storms at all you can't help but wonder if perhaps people had priced a hurricane or 2 in already. US refining margins started the year strongly but have since petered out like an Indian batting performance. The only rescue for the US is the widening Brent/WTi spread but again, I think this is clutching at straws somewhat. The crude structure needs to see a real strong performance over the next few weeks regarding product demand in the US because after labour day maintenance season is right around the corner. There’s one card up everyone sleeve in a falling oil market though - Oh hello OPEC meeting in 110 days’ time. Continue to watch cable and remember stats later. Good day.

Daily Oil Commentary

Brent closed last night at $72.61 down 0.20 and WTi closed at $67.20 down 0.43.

Brent closed last night at $72.61 down 0.20 and WTi closed at $67.20 down 0.43. Whoever fell asleep on their mouse last night with it hovering over the SELL button on their webice must have woken up and realised that perhaps an afternoon power nap was not good for their P+L. At 7.25pm Dubai time Brent was trading $72.63. Cue snooze. At 8.25pm Dubai time Brent was trading $71.16. Cue scratch head and a massive stretch, wipe eyes, look at screen, slurp of cold coffee and an almighty OMGGGGG! At 10.25pm Dubai time Brent was trading at $72.65. Phew. Crisis averted, cue switch off screen and go to the pub. Honestly, I cannot think for the life of me why there would be any other reason as to why Brent would drop other than a local having an afternoon snooze. Can you? Snoozy McSnoozerson just leant on his keyboard and that's why we saw the steep drop and climb back and I won't be hearing any other reasons why. Yes, OPEC lowered their demand forecast but not by much, plus that was earlier in the day. I do have to laugh though regarding the tone of the OPEC report quote "The forecast considers that there will be no significant rise in trade tariffs and current disputes will be resolved soon". Ha! That sounds convincing! Wow. There is a fine line between reality and delusion and I fear OPEC have crossed in to it. Kellogg’s make both All Bran and Frosties but they don't taste the same do they? In OPEC's gold plated kitchen’s I reckon they do. Keep your eye on cable and also Twitter, it has been at least a week since POTUS came out with something mental. Good day.

Daily Oil Commentary

Brent closed Friday up 0.74 to $72.07 and WTi closed at $67.63 up 0.82.

Brent closed Friday up 0.74 to $72.07 and WTi closed at $67.63 up 0.82. One weekend down and already 6th place is looking like it might be a struggle. Still, every cloud, there's still the prospect of meeting Burnley in the Europa League, right John B? Moving on to other nonsense - this oil market. We closed up Friday and honestly, I have absolutely no idea why, just because we did. I know I should be impartial and offer an unbiased view but I'm way too long in the tooth for that plus if I rambled on all day about nothing in particular you wouldn’t be reading this commentary, would you? Exactly. The next 6 weeks are going to be key, not only for the oil price for the remainder of this year but also what happens going in to 2019. Cushing inventories being so low are perhaps the only real support for this market right now as all other bullish indicators are frankly, an excuse. Demand hasn't been as good as many people thought (I did tell you so), the trade war is only going to end up in a petty handbags at dawn gunfight and I'm pretty sure that Trump has something else up his sleeve that is going to throw a massive spanner in the works. All the while OPEC are happy plodding along, keeping themselves to themselves and increasing production as if nothing is going on. But apparently the bulls only acknowledge the existence of OPEC twice a year. Grrr. Some say I woke up on the wrong side of bed this morning. I disagree. Good day and week to all.

Daily Oil Commentary

Brent closed last night at $72.07 down 0.21 and WTi closed down 0.13 to settle at $66.81.

Brent closed last night at $72.07 down 0.21 and WTi closed down 0.13 to settle at $66.81. I hope all of you in Singapore enjoyed National day yesterday. Ah Friday. And the Friday before the start of a new Premier League season is upon us, something my wife is over the moon about incidentally. Many of you will know that I am an Arsenal fan (have I mentioned that before?) and one of the perils of being an Arsenal fan is that of hope. Hope that maybe, just maybe, we might do it this year. We might win the EPL again. But I know that in 2 weeks’ time I will share the same disappointment as Pierre Andurand must be feeling about his hopes of Brent hitting $300. It doesn't take an ophthalmologist to figure out that if something becomes more expensive then eventually people will start not buying that product as much. Or am I missing something? When I made the ludicrous decision to say that I would wear a mankini if Brent hits $85 per bbl I was mocking not only myself but the fact that this market is so predictably unpredictable. When oil hit $147 per bbl a few years ago it sent gasoline prices soaring and less people got in their cars, this caused a crash of gargantuan proportions, but the real legacy of the oil price crash was that it made the end user that bit more savvy. Hence why I was confident that Brent would never hit $85 (gulp). All these rumours of a possible supply crunch are just rumours. The decrease in production from Iran will be easily replaced by the US (in my view this was one of the main reasons for re-imposing sanctions) but the market still thinks that there is more to be priced in. I don't believe it, but we shall see. Brent is at a low not seen since April. $50 here we come. COYG. Have a good weekend.

Daily Oil Commentary

Brent closed last night at $74.65 up 0.90 and WTi closed up 0.16 to settle at $69.17.

Brent closed last night at $74.65 up 0.90 and WTi closed up 0.16 to settle at $69.17. Back in the desert today and it's so humid that even my ever-thinning scalp still looks like Monica from Friends when she's in Barbados. Crude had a choppy day yesterday on the back of the US imposing new sanctions on Iran. Quite why the market decided to react yesterday to this is beyond me, the whole market priced this in the minute that Trump announced sanctions back in May so yesterday was a typical example of headline trading. We're in the middle of August, oil sanctions officially kick in by November and that will be for every single drop of oil, so if you're a delivered buyer in Japan for eg then you are already planning on a September cargo really being the last one you can load without being pointed at and being told "you're fired" like how Trump used to in the Apprentice. These tweets being sent out by, let's face it the most powerful man in the world, are to me the most embarrassing thing I have ever read in my life. How is he allowed a twitter account? Anyway, on to other stupid stories - API data. We can apparently expect a sizeable crude draw - #thumbsup. But builds on both gasoline and distillates #boo. Crude draws this time of year should be expected but so should products - in fact especially on products. Gasoline inventories in the US are comfortably above the 5 year average and builds in the middle of driving season don't bode particularly well for this apparently supply crunch. Happy 53rd Birthday to Singapore tomorrow, enjoy your day off. Back Friday.  

Daily Oil Commentary

Brent closed last night down 1.82 to $72.39 and WTi closed at $67.66 down 1.10. EIA data last night proved that APi were right (well right a little bit) as we saw builds on crude inventories, which caused Brent to haemorrhage once again.

Brent closed last night down 1.82 to $72.39 and WTi closed at $67.66 down 1.10. EIA data last night proved that APi were right (well right a little bit) as we saw builds on crude inventories, which caused Brent to haemorrhage once again. I fear that as the Syncrude pipeline comes back in to action soon we will see Cushing inventories grow once more and the bulls certainly won't appreciate that. Product demand looks OK but stocks are still at a very healthy level, so some real proper dramatic draws will be required before anyone can really take any solace about a possible supply crunch. On that note, I read yesterday that ESAI in its 5-year global oil outlook projects "healthy non OPEC supply growth to 2023". And, quote "There is a misperception that a supply crunch is imminent. In a 5-year horizon, the potential for non-OPEC supply growth is impressive. This will have a bearing on the degree to which OPEC will have to dip into spare capacity to offset disruptions.” Unquote. Hmmm. Now, there are of course various other factors that could put a Rouhani sized spanner in the works and that is obviously possible escalating tensions between the US and Iran. Venezuela production looks perilous, but it has done for about the last 1500 years. These 2 factors are all really, I can see the bulls hanging on to, and perhaps rightly so. But with the trade war looming ever closer to having a damaging effect on the global economy I fear the bear in me is really starting to growl. Rather than being at one of those picnics having his hair brushed by children. Out of the office until Tuesday 7 August, all to Luke pls. Be good, and if you can't be good then be careful. Bye. 

Daily Oil Commentary

Brent closed down 1.34 last night to $74.21 and WTi closed at $68.76 down 1.37.

Brent closed down 1.34 last night to $74.21 and WTi closed at $68.76 down 1.37.  Ahhhh August, there you are.  That month of the year where the whole world is on holiday and when crude oil takes a tumble.  And quite a tumble it took last night.  Apart from determination I genuinely don't see a great time ahead for the bulls, the vast majority of indicators are bearish right now it seems.  China have kindly stepped and not only offered an olive branch to the Iranians but a whole massive field of those olive trees that produce those massive olives that you can buy in Waitrose for about a tenner each.  Let’s get this right - China and the US trade war.  China obviously don't care about US sanctions on Iran, they care about buying cheap oil, and cheap it will be seeing as they are the only buyers in town.  So, you replace US oil currently being shipped to China and treat US shale oil with the same disdain that Trump is with regards to the trade war.  Iran have an ally, the US can’t do anything about it and China reply to new tariffs set out by Trump without even sending a stupid tweet.  Absolute genius.  In other news, EIA data is out later.  Apparently APi said that we will see a rise in crude stocks of some 5mn bbls.  Ouch.  Let's hope they are wrong and that gasoline inventories also show a substantial drop otherwise it could be carnage later on.  July was the worst month for the crude oil market since last August and WTi broke through the 50 day moving average last night.  Anything else?  Oh yes, OPEC, they are increasing production.  So, with "supply problems" apparently resolved (even though there really weren't any), demand not looking great and a trade war of gargantuan proportions, I ask you this Mr Andurand - still see $300 oil on the horizon?  Good day.

Daily Oil Commentary

Brent closed last night up 0.68 to $74.97 and WTi closed at $70.13 up 1.44.

Brent closed last night up 0.68 to $74.97 and WTi closed at $70.13 up 1.44. Sep Brent expires today, and the front 3 months are now in contango...let's see how long this lasts. Around this $75 number Brent continues to trade in fairly thin trading. A 360 seems to have happened over the pond though with the aggressive CAPITAL LETTER tweets being replaced with some what passive remarks that Trump is up for meeting Rouhani. I don't think it will happen fwiw but it certainly is a softer stance that than the Tourettic and embarrassing ping ponging that has been going on for a while. Let's see how this develops. OPEC production in July looks like it has increased, which should be expected considering the cut agreement is nigh on null and void with Iran and Venezuela keeping the cartel's gross production figures in check. APi data is out later and once again the market will be concentrating on those numbers very closely, mainly because Love Island has finished as opposed to anything actually important. Joking aside EIA data is of prime importance at the moment, it is once again the only real tangible indicator of prompt demand and the only real one that the market reacts to. Demand is key right now and it has been very well hyped up so far this year. Here are some figures for you - US oil demand is at the same as it was in 1973 and demand in the EU for oil is actually down since then. The real demand growth over the past 4 decades has been from the Asia pacific region - a colossal 280% increase since 1973. Who says a trade war isn't important for demand? Gulp. Good day.

Daily Oil Commentary

Brent closed Friday down 0.25 to $74.29 and WTi closed at $68.69 down 0.92.

Morning all and I hope everyone had a nice weekend.  Actually, is anyone out there?  It seems like the whole world is on holiday in Cornwall.  Anyway, on we shall march - Brent closed Friday down 0.25 to $74.29 and WTi closed at $68.69 down 0.92.  It can be argued that the only by-products that bureaucracy produces are those of stupidity.  However, people like things to have a bit of normality about them and their daily life and when times are thin in the oil market, stupid things can also happen.  I mentioned last week that the market is looking for direction, it is teetering on the edge like the Force India Formula 1 team.  I don't need to repeat myself and give the arguments for both the bullish and bearish corners, but I am fairly confident that barring some geopolitical factor (and with Donald's access to Twitter seemingly always available, that could be at anytime) that we can expect to experience a fairly rangebound market for a while.  Where's the drama?  Well the Premier League starts again next weekend so only a few more days to wait for something to take our mind off.  Good day and week to all.

Daily Oil Commentary

Brent closed last night up 0.61 to $74.54 and WTi closed at $69.61 up 0.31.

Brent closed last night up 0.61 to $74.54 and WTi closed at $69.61 up 0.31. Brent has received some support over the last couple of days with news that oil flows through the Red Sea shipping lane of Ba Al-Mandeb have been temporarily halted. Couple this with Iranian threats that the Straits of Hormuz could be shut to crude flows and, potentially you could have the vast majority of Saudi exports shut in. Ouch. How has the market reacted? Well with about the same anticipation as watching a Tranmere Rovers vs Accrington Stanley preseason friendly. Who are they? Exactly. Do keep a beady eye on developments in Saudi though. If you look really closely, and I mean delve in to the dark belly that is Google (carefully ofc) you may have perhaps have read a story that Citibank have made an argument for $45 oil. Finally, someone agrees with me! Where have you been all year Mr Morse? I think the market is on the edge of which way will prices go, i.e. up or down but it cannot be ignored that Iran, Venezuela, the trade war spat and apparent "robust demand" make the bulls corner that much more appealing in the immediate term. However, and I will make the other case as I am British and like the BBC I only offer an impartial view (ha!), it can also be argued that oil production and supply is not declining nor is it failing to keep up with demand, quite the opposite in fact when you factor in just how exponential the growth has been from over the pond. I think the market is happy with $75 a bbl. it is a happy warm place where it can put its feet up and read a paper by the fire. Will that fire eventually go out though? Who knows. I'm off to go and buy Mr Morse a beer. Have a good weekend.

Daily Oil Commentary

Brent closed last night up 0.38 to $73.44 and WTi closed at $68.52 up 0.71.

Brent closed last night up 0.38 to $73.44 and WTi closed at $68.52 up 0.71. We witnessed another day yesterday where oil prices were volatile(ish) before closing at a fairly benign level, if you can call a 0.5% increase benign that is. Crude is up this morning on the back of anticipated stock draws in the US according to our friends over at the API. Because API get it right ALL the time so why not buy in to figures that are about as accurate as a story published by the Sunday Sport? It should be expected that this time of year we see stock draws in the US, so sharp movements up when any bullish news comes out signals to me that this market is relying so heavily on prompt demand picking up that it is akin to the same delusional expectation that Dick Emery will secure the Premier League title in his first year as Arsenal manager. Oooh, you are awful. I'm also a little bit shocked that the market hasn't reacted to the fact that the first signal his Trumpishness has made that perhaps there could be a workout agreement with Iran, qte "We'll see what happens, but we're ready to make a real deal, not the deal that was done by the previous administration, which was a disaster,". How and why has that been ignored? I'm not saying that the Nov. deadline is going to extended, far from it, but surely the rhetoric that there will be less bbls around come Nov and the subsequent reaction regarding flat price, how has that not made one bit of difference? Don't answer that. Stats later. Good day.

Daily Oil Commentary

Brent closed down 0.01 last night to $73.06 and WTi closed at $67.89 down 0.37.

Brent closed down 0.01 last night to $73.06 and WTi closed at $67.89 down 0.37. Mark Twain once said, "It ain't what don't know that gets you in to trouble. It's what you know for sure that just ain't so". Poetry. A statement that can be used to sum up this oil market pretty well right now. On the other side of words of wisdom we have President Donald Trump, WHO THINKS THAT IF YOU WRITE WITH CAPITALS AND PUT LOTS OF !!! THEN PEOPLE REALLY WILL LISTEN AND BE SCAREDDDDD. BOOOO!!!!. Ridiculous. This twitter argument that the whole world is reading is quite frankly, embarrassing. It's like being a child school and standing behind your Mum's legs shouting at someone who just pushed you over "I'll give you a knuckle sandwich Mister!". Anyway, on to other matters - this oil market. A benign end to what was somewhat of a volatile day on Brent yesterday - the market can't decide whether the trade spat, the US/Iran twitter argument or slowing Chinese demand should be the correct headline to conentrate on, so it chose all of them and flat we closed. It is surely only a matter of time before something tangible yields from the ongoing trade war stories and it probably won't be a pretty outcome, so I imagine crude will stay in a fairly narrow range over the next few days. The only ingredient to this ever-intriguing recipe however is going to be product demand in the US. Last week we saw a gasoline draw, a few weeks of those and a hurricane or 2 and oil could get up to those mankini levels once again. Good day.


Daily Oil Commentary

Brent closed Friday up 0.49 to $73.07 and Sep WTi closed at $68.26.

Brent closed Friday up 0.49 to $73.07 and Sep WTi closed at $68.26. I'm not sure what it is about this oil market but it likes to be stuck in a range. I suppose we all need comfort blankets when we are felling poorly but Brent so far this year has been gapping either up or down quite dramatically and then staying within a 5 buck range. From May to Jul we were in $75-$80 territory, now it looks like we are set for $70- $75 range for a while. What will break us out of it though? I think I know the answer and that comes from our favourite golf playing, brushed back hair, orange President. Like him or not he has actually done a pretty good job so far, regardless of his whacky ways of diplomacy. However, the trade war spat he is putting out could, quite frankly, cripple his whole administration. There are certain things that everyone in life has a real bugbear about but can do absolutely nothing about, not anything of positive influence anyway. My bugbear is when some stands too close to me in a queue "step back space invader!", but what's the point? It happens all the time and now I just get on with it. As much as Trump perhaps has a point with regards to tariffs he should just let it go, or perhaps curb the late night Friday drunk tweeting. If it carries on then the global economy and everything else with it, could be in for a pretty grim second half of the year. Good day and week to all.

Daily Oil Commentary

Brent closed last night at $72.58 down 0.32 and WTi closed at $69.46 up 0.70.

Brent closed last night at $72.58 down 0.32 and WTi closed at $69.46 up 0.70. As the summer holiday season begins and most people are contemplating whether they can get away with wearing last year’s speedo's I wonder if the oil market is getting ready for a break as well. Since the end of June Brent is down close to 10%. Much of this can be attributed to the fact that Trump got on to twitter to rave on in that idiotic way he has of typing, complaining to OPEC about oil prices "Not good! Trump not happy! He think oil too high so must send stupid tweet to correct! #howdoyouspellcovfefe". Eejit. But, in all seriousness the market was due a bit of a correction, demand hasn't quite been as good as people were hoping for so far and unless Hurricane season blows a proper then I don't really see what else is going to trigger prices up to the $80 handle. Saying that, a Saudi minister yesterday tried with all his might to allay fears of oversupply and said that he expect "robust demand in Q3". The only "robust demand" is coming from the Saudi's themselves over the summer period with regards to the gargantuan fuel oil buying spree they are on, aside from that, I'm not really sure how robust that demand forecast will be, but we shall see. In other news, one of the bullish factors that drove up the Brent market last week was the Norwegian oil strike, but that has been resolved over a smorgasbord of Smoked fish and Vodka so happy days there. The first weekend without the World Cup is upon us, what ever shall we do?!!? Good weekend.