Daily Oil Commentary

Morning all, it's been a while, hasn't it? Brent is trading this morning at $114.23 up 0.67 and WTi is trading up 0.81 at $110.58. So, it's over a week since I last ranted about the oil market and where was Brent trading then I hear ye cry? That's right, not very far from where we are now - $114.29 don't you know. This really is the state the oil market finds itself in and where it has been for some time. Does the threat of recession pull prices below $100? Couple that with demand concerns owing to something called "COVID" and, arguably, one could raise an eyebrow like The Rock at this very threat. However, people's elbow or no people's elbow the market is very much looking at things from a different perspective in my view and that is the threat to global oil supplies. I think if the market were to look at the threat of recession, and price recession in, it would have done that by now. The market has an uncanny way of pricing in threats before they are actually threats and with a recession looming then how is oil still hovering between $110 - $115 per barrel on Brent? Put simply, the markets are concerned that there will not be enough oil in the coming months once an embargo on Russian oil imports is agreed by the EU. Now, there are several counter arguments to this - Will there be a ban on diesel? Or just crude oil? Will the flow of Russian oil still happen, and trade patterns are shifted? Will Arsenal ever qualify for the Champions League and not bottle it? Wait, Last question - wrong group chat. But the first two questions, and many others aside, are what traders are asking themselves. This is what is keeping oil prices supported but with so many balls in the air it is all about when, and how, they drop and what side of the range we break out of. Stats are out later in the US, keep your eyes on those for some short-term direction. Memorial Day coming up in the USA on Monday which signifies the start of driving season. Hmm. I'm back Monday, where it will be my final oil commentary. For now. Stay tuned. Good day.

Daily Oil Commentary

Morning all. Firstly, Starfuels would like to offer their condolences to the citizens and residents of the United Arab Emirates on the death of President His Highness Sheikh Khalifa bin Zayed Al Nahyan. I have been lucky to be part of the UAE for the last decade and the success of the Nation wouldn't have been possible without the vision and leadership of His Highness. Ana lilah wana alih rajieun. Brent is trading this morning at $114.29 up 0.05 and WTi is trading down 0.08 at $114.12. Right, today I want to be about things that I don't want to talk about, OK? First, I don't want to talk about returning demand from China now that they are slowly but surely coming out of lockdowns, I don't want to talk about the fact that the doom mongers said that demand would take such a hit that it Brent would have no choice but to drop below $100, OK? So, I don't want to talk about that. Good, right next, I don't want to talk about falling supply from Russia. Definitely don’t want to talk about that, even though it seems inevitable that once Hungary secure energy from other areas that the EU will ban Russian oil and gas and that supply simply cannot just be replaced at the drop of a hat. At the same time, I don't want to talk about what this may do for the price of oil come July when the world will supposedly have a clear view of when that supply will be halted from Russia but also what gas prices will do in Europe come Q4 when the dreaded snow falls, and the nights draw in. Nope, DEFINITELY don't want to talk about that. I tell you what else can do one and that I definitely 100pct do not want to talk about and that's inflation. Yeah, nah let's not talk about that, and the fact that the world will probably, if indeed not already in it, be in a recession by the end of the year and because there isn't enough oil that we will be in a world going through a recession but still triple digit oil. And lastly, I definitely don't want to talk about football. The last one for absolute sure. See what I did there? The opposite of the opposite, the rockahula, the olddd spinnarooni. I managed to get through commentary without talking about what I didn't want to talk about. Wait. Oh for….Good day, and week to all.

Daily Oil Commentary

Morning all. Thursday, and welcome to it. Brent is trading this morning at $106.25 down 1.26 and WTi is trading down 1.46 at $104.25. So, as we approach June and nearly half the way through 2022, what word would you describe the year so far? Yep, second that, and I shan't be bleeping it out either. Honestly, I can't quite think of the words to describe not just oil markets, but all markets in general right now. Let's be polite and sayyyyy, ummmm, ambiguous? I remember a time when oil markets used to talk about nice things, you know those sorts of problems that you could almost discuss with your Mum over a brew and a biscuit - "How's work love?" "Meh, not bad, driving season coming up in the US so that should make for an interesting summer, but (chuckles) you know there's always a hurricane round the corner!!!" "Ah that's nice, another biscuit?". Dunk. Off you went to work. Nice. It was a simple time. These days it's more like "MATT. Have you read the blinkin Daily Mail this morning! Honestly, I give up!! Can't bear it". Not a biscuit in sight. Not even a custard cream. I joke of course. Custard Creams are up there with Jammy Dodgers in my view but let's keep it oil for a moment as opposed to sugar enriched snacks. It is that kind of market where you wake up and dread reading the news just in case something else happened that will mean you're in for a day of putting your hands over your eyes and screaming "OH FOR …." Yep, you get it. How was yesterday I hear you ask? Well, let me give you the range - a low of $101.30 and a high of $108.29. Just the $7.99 swing then. I sound like that famous Peter Kay sketch. "I lost 14 stone in a day" but it's "oil swung 7.99 in a day". Volatility like this is just kind of accepted at the moment but I'll say this - it is killing markets in general, swings like this will eventually be the downfall of the markets themselves. People simply cannot afford the margin calls that people are asking for and the crunch is being felt in oil markets. It’s not just oil markets - let's look at Crypto for a second, one of my favourite subjects - Ethereum is down 22.8% today. TODAY. Down 38% in a week. Now, I'm not going to get into a chat about Crypto but if we just look at this as an asset class then I think it pretty much sums up sentiment in all markets right now, except for oil of course, because Russia have invaded Ukraine and those EU sanctions on banning Russian oil imports are edging ever closer. Imagine - $100 oil in a world going through a recession. Time for another biscuit. Good day.

Daily Oil Commentary

Morning all. Tuesday. Brent is trading this morning at $104.65 down 1.29 and WTi is trading down 1.21 at $101.88. Readers of this commentary would know, that sometimes, sometimesssss, I have an opinion on things. And why not? "Opinion is the medium between knowledge and ignorance,” said Plato. And he was really clever, you know. But when I wake up in the morning, I do struggle to keep my opinions to myself when I read this "Buildings in Odesa lay in ruins on Tuesday, a day after Kremlin forces pounded the southern Ukrainian port with missiles and Russian President Vladimir Putin led defiant celebrations marking the Soviet's victory over Nazi Germany in World War Two". Quite simply, I don't even think that headline needs an opinion from me, however one thing is for sure, that even if the EU are struggling to come up with a workable agreement about the future of Russian oil imports, there will eventually be one. Quite what this does for oil markets is frankly anyone's guess (20-30-50? dollars a barrel) but, whilst the EU can't get their plans in order the oil market prices in that perhaps sanctions won't be as brutal as originally feared. I don't buy this argument, if I'm honest, I think that there will be waivers for certain countries but in essence the EU is positioning itself away from Russian energy. This only results in higher oil prices, but until we see an agreement then the oil market will dance around these levels. If we look at markets in general though, the last three trading sessions have been absolutely brutal - "The world’s largest technology companies have shed over $1 trillion in value in just three trading sessions.". Gulp. $1 trillion dollars. I mean that's a number that not even Dr.Evil could request. In general, the world is fearful of massive economic slowdown, and that starts with China and the relentless drive towards zero-COVID. The dreaded "R" word is being spoken of globally and whilst this may dampen some demand, I maintain that that the drop we will see in demand will be less than the drop we will see in oil and gas supplies from Russia. Don't take your eyes off those headlines, especially if you're Sir Keir Starmer. "But but but I only had the one!!". Good day.

Daily Oil Commentary

Morning all and I hope everyone had a good weekend. Like Watford's stay in the Premier League - let’s keep it short and sweet. Brent is trading this morning at $110.96 down 1.43 and WTi is trading at $108.27 down 1.50. So, the week opens up with the same questions it closed last week on. What will the EU do vis-à-vis banning Russian oil and by how much will oil demand be dampened by continued lockdowns in China? The oil market seemingly doesn't want to second guess the answers to either of these, hence why we are dancing around $110 per barrel. If you're an oil producer then this is something you'd happily do the Charleston to, oil above $100 for Middle East producers especially is only good for fiscal budgets and the Middle East is set to be the leader this year in global growth on the back of higher energy prices. What if you're not an oil producer though? Ahhh the old "end user" argument again. Well, this is also keeping a lid on prices and with monetary policy tightening around the world, the inflation/recession argument is very much a concern the world faces. However, even with economic concerns, COVID seemingly refusing to be beaten in some countries and an equity market seemingly pricing in both, I would argue that the supply side of the oil equation right now is the biggest factor right now. It's just when the EU can get together before we really see oil markets pricing in a lack of supply that is the key. Good day, and week to all.

Daily Oil Commentary

Morning all and to all readers who celebrated Eid Al-Fitr may I wish you and your families and loved ones Eid Mubarak. Brent is trading this morning at $111.07 up 0.93 and WTi is trading up 0.69 at $108.50. So, a week has passed since my last commentary and the shock of the week was Real Madrid beating Man City, what a comeback. I say that even though Ukraine are currently being invaded by Russia via a "special military operation", which by far and away is a much, much bigger story than some football game which is largely irrelevant, given the circumstances Eastern Europe is faced with. Yesterday the EU proposed a ban on Russian oil, this, rightly so, meant that Brent rallied $5 per bbl. Now, whilst there will be some resistance from certain member of the bloc, namely Hungary, Slovakia and Czech Republic, it does seem that the market will soon face a ban on touching Russian oil. The big item from the proposed sanctions yesterday however to me was "It also proposes to ban in a month's time all shipping, brokerage, insurance and financing services offered by EU companies for the transportation of Russian oil". That part is what I think the market took as the sign that, whether certain governments resist calls to stop importing Russian and are granted "waivers", that basically, the vast majority of the world's oil trading environment simply cannot scheme a way to circumvent sanctions on trading Russian oil. I said last week that an aggressive headline vis-à-vis Russian oil sanctions was worth about $5 per bbl, so allow me to gloat this one time I was spot on. Thanks. If I'm honest, I am surprised Brent didn't rally higher yesterday on the back of this news but, of course, dragging the market down is the effect lockdowns in China are having on the demand side of the equation owing to COVID. I find it quite a bizarre situation that whilst my family were in the UK the last week, feeding goats in petting zoos and running round a field with bellies full of sugary ice cream, over the other side of the world people cannot leave their homes and the roads are empty. It is the juxtaposition of these two stark realities where oil finds itself, in a tug of war between concerns on the supply side of the equation, and demand concerns from the world’s biggest oil importer. OPEC meet today, and, with all respect Mr Barkindo, I think your job has been largely done for you by current market dynamics. Unless we see a change from either side driving the supply and demand balance, flirt around $110 we will. Good day.

Daily Oil Commentary

Morning all. Fersssday. Brent is trading this morning at $105.00 down 0.32 and WTi trading at $101.80 down 0.22. You know, the only person I think who should be trading this market right now is Claudio Ranieri. Why The Tinkerman I hear you ask? Well, in the 2015-2016 English Premier League season he managed to guide Leicester City to become champions. The world stood back in awe and didn't quite know what to do. It seems like the oil market doesn't know quite what to do right now, stuck between concerns about supply disruptions from Russia and demand coming lower in China and the rest of the world because of spiralling inflation. My favourite Claudio quote of all time by the way, “Football managers are like a parachutist. At times it doesn’t open. Here, it is an umbrella. You understand, Mary Poppins?”. Yes Claudio, yes, we understand. I was thinking this morning about quite what state the world is in right now, and no, it's not all bad. Let's split it up by region and be monosyllabic in summary. Europe - broken. North America - blinkers. Middle East - booming. Asia - struggling. Antipodes - welcoming. South America - chilling? Now, I am not in the business of offending anyone, what, me? No, seriously, I am not. My aim on this medium is to create debate, think about what is happening in the world and thus what may or may not happen to the price of oil and the energy complex in general. But 2022 has proved extremely difficult to form a cohesive argument about the state of the oil market because just how fractured the world has become. Hence why I summarise the parts of the globe above. Crude prices are lower yet refining margins for diesel at an all-time high. What does that tell us? Fuel oil used as a substitute for LNG in Asia hits record high. Again, what does this tell us? There are myriad stories along the same lines, but these are two that stood out to me. I would argue the answer to the first one is that simply crude oil has been in most Wall St funds for a while now and crude is merely following the general risk off attitude equities have faced the last few days. From a physical point of view products are stronger than ever. The second question - now this is the important one to look at. Are LNG cargoes being diverted to Europe based on the fact that those EU countries will pay what they have to, when they have to in order to replace Russian gas? I'd argue yes. And there we come back to the BTU crisis we were in around Q4 last year. All of this means one thing - higher prices for the end user. The inflation, and hence recession argument, grows stronger every day, but with tensions in Ukraine seemingly increasing, even Claudio himself may have trouble tinkering this one. Good day. 

Daily Oil Commentary

Morning all. Brent is trading this morning at $105.54 up 0.55 and WTi is trading up 0.44 at $102.14. Someone once said, probably with a biggish nose, a questionable beard and a pointy hat "The loudest noise in the world is silence". And no, I'm not referring to Nanny McPhee. Yesterday we heard that Russian energy giant Gazprom would suspend gas supplies to Poland and Bulgaria over their refusal to pay in Russian roubles. The response? Not a lot - Poland have said "it will manage" and, at time of writing, gas was still flowing to Bulgaria but the response from the EU at the action from Russia has so far yielded nothing. Silence. To put this into context, Poland bought 53% of its gas from Russia in the first quarter of this year and Bulgaria a whopping 90%. Now, whichever way you cut it, (and no that's not a pun), to say Bulgaria are completely reliant on Russian gas is not an exaggeration. The market this morning has responded to this action as you would imagine it would, up 10% on ICE NBP. In my opinion, this signals the start of tangible declines in Russian energy supply. So far, the market has taken it upon itself to cease buying Russian energy, whether this through a political standpoint, one of lack of finance or insurance, or one of concern that nobody will be there buy the barrels for the very same reasons. The fact Gazprom are turning off the taps because payments are not being made in Roubles, is the start of what could be a Summer where we witness energy price spikes globally that are unprecedented. Now, it wouldn't be fair on this commentary if I weren't to try and balance this somehow but, in my opinion, this market is so far out of balance it's like a tequila'd up 21-year-old trying to walk on a frozen rope. But balance we try so balance we will. Demand. Ahh that elephant in the room that in years gone by I would banging the "but where's demand? where is it?!!? Pre Covid levels? Pfff" drum. The slowdown in China owing to Covid lockdowns is having an effect on oil demand owing to lack of mobility. However, I do not see that the cut to demand is even close to the cuts we will see over the next few months to oil supply. Recession talks? Hmm, this is one we have to wait and see, and we have some big GDP numbers coming out later this week but again, even with that possible dent to demand if inflation keeps on growing, I think the supply issues right now outweigh the demand ones. Keep your eyes on the headlines for a response from the EU. Stats later. Good day.

Daily Oil Commentary

Morning all. After some serious technical difficulties yesterday and after a couple of spinach smoothies, welcome to the last week of April 2022. Brent is trading this morning at $102.92 up 0.60 and WTi is trading up 0.41 at $98.95. I find it amazing that whilst the world is still in the middle of a pandemic, evidenced by stories that Beijing may now also go in to lockdown as well as several other major Chinese cities, including the financial hub of Shanghai, whilst Europe and indeed the rest of the world is struggling to come to terms with the fact that Russia have invaded Ukraine and whilst the world is facing inflationary pressures not seen since Wizard were at Christmas Number One - what's the leading story today? Will Trump return to Twitter after Musk takeover? I mean, really? Realllyyyyyyy. Look don't get me wrong; I miss the occasional Covfefe tweet or the odd "Very important that OPEC increase the flow of Oil. World Markets are fragile, price of Oil getting too high. Thank you!" ramble but I would safely say that the world has bigger questions to ask itself right now than if The Donald will be back at a social media outlet near you any time soon. Here's the thing though - the market is simply caught in that weird space like when you first wake up - is it Saturday? No no, Sunday, and I have nothing to do. Ahh nice. Calmmmm. Then you rub your eyes, get kicked by a child in the face, stub your toe on the corner of the bed and realise it is just another Tuesday. Limbo. That's where the oil market is in right now. What, if anything, will come out of the EU vis-à-vis energy sanctions on Russia? Will the world face an energy supply crisis if things continue the way they are? What does China lockdown do for the demand outlook? What does an oil price above $100 per barrel do for demand? Will a hawkish fed be enough to calm inflationary pressures and end the threat of a global recession, or is it too little too late? Will Arsenal manage to cling on to 4th place? I know the purpose of this commentary is to answer the questions, not ask them, but apart from the last one all are very very ambiguous. Arguably a firm answer on any of those questions, and trust me, there are a million others on top of those, I think could easily be worth 5-10 bucks per barrel. Seemingly though, right now the answers to all questions are looking further away, and on that basis, I think oil could dance around $100 per barrel for the foreseeable future. A price, arguably, that isn't bad for any oil producer, and from a moral point of view, I'd argue that this is the question that should be answered first. Good day, and rest of week to all.

Daily Oil Commentary

Morning all and welcome to Friday the 22nd of April. Nearly a third of the way through the year and go on, give me one word to sum it up so far? Yep, second that. Brent is trading this morning at $107.19 down 1.14 and WTi is trading down 1.07 at $102.72. You know it's funny, I wake up early each morning and my first port of call is to look at what's happening with oil prices. Since the "special military operation" started eight weeks ago I have been watching Brent trade in some ridiculous day ranges - 10 bucks became the norm "Ah, just the 10-buck range then" we all said and this started off as something quite ridiculous, then, over time we got used to it. I mean, we didn't, we just didn't even acknowledge really what was going on as nobody could quite believe what was going on. Now, you may think I am speaking in past tense and I am. But the market we are in right now frightens me even more. Yesterday was fairly, calm? Just a 3-dollar range. But, waking up over the last few mornings, what with what is going on in Eastern Europe, I am wincing at my phone expecting a headline to have come out of overnight and we see a rally of $20 bucks, $30 bucks? One thing is for sure, even if the "special military operation" draws to a halt, the world isn't going to thank Russia for pulling out and sanctions are immediately lifted, and the world can get back to buying a barrel of Urals range finest crude oil. Not a chance. Now, I'm verging on getting political here and I don't want to cross that line, so I won't. But I do think the market is on the edge of popping up, and when I say pop, it will be like when the oompa loompas took Violet away for eating the banned bubble gum, that kind of pop. Frightful that was. Anywayyyy, look I get the world has huge inflation concerns, and that yes, unless some serious fiscal measures are taken by the people who control the coin (Tyrion Lannister I think?), that the world is heading for a recession. BUT, put simply, my view is that in Q3 there will simply not be enough oil owing to the measures people are slowly but surely taking to ban the import of all Russian energy. Arguably there isn’t enough oil right now so come Q3? Fear not! Here they come to save the day!!! Mighty OPEC are on the wayyyyy. Ah ha, yeah, nah, mine, yours. "OPEC told the International Monetary Fund's steering committee on Thursday that the surge in oil prices was largely due to the Ukraine crisis, in the latest signal that the producer group would not take further action to add supply.". Imagine that. That's like me writing a post it note to my wife and sticking it to the fridge "Hi babes. Off for a stag weekend for three days. See you Monday". Brave. Very brave. On that note, literally - see you Monday. Lates.

Daily Oil Commentary

Morning all. And when have youuuu been? Well, Easter got in the way, far too much actually, which resulted in the "Easter Bunny" managing to hide the Easter eggs so well that he forgot where he hid them. Turned out in the boot of the car, half melted. Naughty bunny. Anywayyyyyy, oil? Or chocolate? Let's start with oil. Brent is trading this morning at $107.85 up 1.05 and WTi is trading up 0.94 at $103.13. STAT TIME, an early one I know. Dahh dahh doo doo dum dum. Where, my oily friends, was WTi trading this time two years ago? That's right. $-16.74. Let me just say that again. This time two years ago WTi was trading at MINUS 16.74 per barrel. I remember that day like it was yesterday, where I couldn't take my eyes off the screen, wondering if the four horsemen were gargling in the wings and I would start reaping what I had spent years sowing. Turns out was but a scratch! Will we ever see negative oil again? If you had asked me that two years ago, I would have thought that there was a real threat that we could what with the world in the beginning of a crippling pandemic and OPEC seemingly not a clue what to do. Ask me that same question today? And I would request a dawn duel with you for being so foolish. I ask you this though - headlines from two years ago that most countries were going into lockdown and travels bans globally were kicking in, crippling oil demand, or headlines from today that read "World faces hunger "catastrophe" from invasion and "OPEC+ supply gap widens in March as sanctions hit Russian output", which are worse? In the space of two years, we have gone from a market that was facing a supply surplus the likes nobody had even seen before resulting in negative oil prices. To a market that is facing a supply deficit the likes we have never seen before. The latter, however, has not yet yielded record high oil prices and here's the thing - "not yet". I have made the point recently that whilst current oil markets have seen relief from gargantuan releases globally of strategic oil reserves, we are still seeing Russian oil flow into global systems, some have started to stop importing but most haven't. This cessation of Russian oil, in my view, won't really be started to be seen until the end of Q2. I think this summer could see us pricing in the loss of Russian oil from the supply side once we see data flowing in that evidences the same. For the time being though I think we could stay flirting around the $110 level. Good day to all.

Daily Oil Commentary

Brent is trading this morning at $101.28 up 2.80 and WTi is trading up 2.90 at $97.19. You know, a friend said to me yesterday "$100 Brent is soooo yesterday". Then this morning same friend said, "Sub $100 crude is soooo yesterday". Yesterday Brent hit a low of $97.57, this from a high earlier in the day of $103.30 before settling at $98.48. It seems like $100 is going to be where we pivot for a while, I think but, if I'm honest, I'm not sure exactly why. I offered a few opinions yesterday as to why oil prices have come off the highs of $140 we saw only a few weeks ago. But when I look at the headlines, I can't help but feel that prices should be higher. Is the market now that frightened of COVID again? It does seem that China's zero-COVID policy is here to stay, thus reigniting demand concerns owing to the pandemic but, in my view, the concerns around supply outweigh sporadic, yet large scale granted, lockdowns in China. Let's look for a moment at what has happened not just in terms of flat price but in the structure of the Brent futures market, because it really is, quite extraordinary. On the 7th March the spread between June and July Brent futures was trading 4.95 backward. So, it was 4.95 higher in June for a barrel of Greta's favourite liquid than it was in July. This was down to the fact that the market was pricing (pricing in a panicked way I hasten to add) that the world was facing a supply crisis owing to the fact Russian oil would be persona non grata. Where is that spread today? It's worth 15 cents. 15 cents! I wouldn't be surprised, and this is purely down to current sentiment, if front Brent structure turns negative this week, or contango as we oil geeks like to phrase it. That is a remarkable turnaround but, as I said above, I would argue that the issues around Russian oil being accepted in the market, are worse than where they were on the 7th March and Mr Barkindo agrees with me - "We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions,"…" "Considering the current demand outlook, it would be nearly impossible to replace a loss in volumes of this magnitude.". Now, this is all speculative of course, but if the leading headline is concerns about demand dropping off then is it by 7mn bpd as Barky says above? I think not. I think the market has come off as the global SPR releases have eased concerns but again, that is only the equivalent of 3mn bpd. "Only". I would also hazard a guess that once the EU can collaborate on an agreement on what to do regarding importing Russian energy there are traders in the background saying "0.15 for the front brent structure? Cheap! Mineeeeee". Keep your eye on that front spread and, of course, on the headlines. 

Daily Oil Commentary

Morning all. Welcome to Wednesday. Brent is trading this morning at $116.07 up 0.59 and WTi is trading up 0.36 at $109.63. STAT TIME. Doo doo dee dee duduumm dumm dahh dah dooooo. On March 23, 1839, the initials “O.K.” are first published in The Boston Morning Post. Meant as an abbreviation for “oll korrect,” a popular slang misspelling of “all correct” at the time, OK steadily made its way into the everyday speech of Americans. Now, I wouldn't say things are OK right now. Far from it in fact. But on the 23rd March 2022, if The Boston Morning Post would like to get in touch with me then I think "OK" should be replaced with "Okayyyyy". Because that's my reaction to reading everything right now. "Inflation is transitory". Okayyyyy. "Brent could hit $300". Okayyyyy. "Brent could break below $100". Okayyyyy. I feel like I could read the morning paper upside down, whilst in a compromising position, trying to slurp hot tea and it would still bring me to the same reaction. Slurrrrpppp. Okayyyyyy. Boston Morning Post - you are welcome. If you're still going of course. Yesterday was interesting. I mean, not to trade it wasn't, trust me. I managed to get myself in and out of the box more times David Bloomin' Copperfield on his opening night at The Mirage. Anywayyyyy, the problem with the markets right now, and crude in particular is the sheer volatility, I have rarely seen a market like it, certainly not for such an extended period of time. What does this actually mean though? Well, as my mate Simple John would say "Simple really mate" - it means the vast majority of participants are reluctant to get involved in a market that could easily bite their hand off in a matter of moments. It's like feeding a baby elephant at the zoo, awwww look! look how sweet he is! eating peanuts out of my hand with that fluffy little gingery beard between his eyebrows! Awww Mummm..KAPOWWWW! Dumbo snaps those peanuts out of your hand and tramples all over you. Peasant. And here lies the issue - has the Brent futures market settled down into a range of $110 - $120 until we see some further clarity over what Russian energy flows look like? It is still too early to say in my opinion but here's the thing. I can form an argument that there isn't enough oil in the market right now to meet demand, in fact that argument and the $100 oil one was there before the Russia-Ukraine tensions started. Then I can form an argument that higher oil prices mean an element of demand destruction in a world that is coming out of a pandemic. Which side flips sentiment, however? Hmm, with China continuing to lock down owing to COVID and the narrative from the West on Russian energy sanction still somewhat ambiguous I think we could see, in the short term at least, Brent come under a bit of pressure, volatility will be rife however and I think we will trade between 110-120 for a few days. But what do I know? I'm off to buy some more peanuts. Mrs Jumbooooooo. Good day.

Daily Oil Commentary

Morning all and I hope everyone had a good weekend. Like Chris Rock at The Oscars, oil is getting slapped down this morning (too early? I don't think so but if you've been involved in show business for as long as Mr Smith has, and you think a reaction we witnessed from The Fresh Prince is justified then I'm sorry, but I can't help you). I kind of wish when he was presented with The Best Actor Oscar that he had been introduced with "And the winner, by technical knockout, issss…" Anywayyyyyy, enough early controversy, let's talk oil, shall we? Brent is trading this morning down 5.00 at $115.65 and WTi is trading at $108.68 down 5.22. So, another week of turbulent oil market lays ahead, I think. At what point does it become normal though? For oil market to swing 5 bucks in a day? I'd argue we should ask a Norwich City football fan - if you're so used to your team being relegated and promoted is it just something you get used to? The market has woken up to the fact this morning that Shanghai is going to enter strict lockdowns owing to rising COVID cases. It doesn't get more dramatic than the two opposing forces driving oil markets at the moment, does it? On one hand you have the invasion of Ukraine by Russian forces. Gulp. On the other hand, you have a global pandemic closing down one of the world’s busiest cities. Double gulp. As I have been saying for a while, most other news articles are being dismissed right now but I can say with some certainty that oil markets haven't reacted as dramatically as they are this morning owing to a COVID headline for quite some time. We will have to see how the lockdown pans out, but one thing is for sure, if high prices don't destroy demand, then COVID is still very much there bringing the same threat with it. We have an OPEC+ meeting on Thursday and whilst I don't see a change in terms of production levels from what has already been agreed, you know the market loves an OPEC+ meeting so, as usual, keep your eyes on the headlines. Good day, and week to all.

Daily Oil Commentary

Morning all. Friday. The last Friday of March 2022, nigh on a quarter way through the year and what word would you use to sum 2022 so far? Yep. I'll second that. Brent? David? Let's have a look. Brent is trading this morning at $118.74 down 0.29 and WTi is trading at $111.99 down 0.35. What a week. Full of yeah, nahs, mine, yours and general yelling at screens. Is it right to say that the oil market has had a "good week"? Do we all jump for joy at the fact that energy prices are edging closer to record levels? I'd argue no. Unless you have a nodding donkey in your back garden of course, and no, I'm not referring to Eeyore agreeing with whatever you're saying. Brent is up 11.57 at time of writing. 11%. Let’s bear in mind, and I do go back to where oil prices were two years ago again, just to give us some context, and also so that I can justify the rates I'm paying for my oil charts, an 11% increase in oil prices two years ago would have yielded a rise in prices of just over 2 bucks. We are over five times that now. Just think about that for a moment. Five times. Bonkers. There are plenty of stories to digest this week and whilst we could talk about most of them, this one, which to me, could very well be the precursor to liquidity drying up in oil markets - ICE has increased the margins for May Brent crude futures by 19% effective March 25, the third margin update this year. ICE increased margins for front-month Brent crude futures to $11,902 per 1,000 barrels, from $10,030 previously, and follows updates effective Jan. 6 and March 14. It's an odd one, I am looking at that gargantuan figure for one lot of Brent futures and am thinking, how is that sustainable? If you are a trader who is working off thin margins and thin working capital, how are you going to be able to put on hedges for a simple 5kt cargo of your finest fuel oil? Put simply, you can't. I mean you can. It just means that all that margin you worked on for two weeks goes straight to Mr Banker. And what rhymes with banker? That's right. A tanker. And here's another story for you from the Suez Canal Bugle published earlier this week (it’s not actually a paper, it should be, but it's not) " Egypt's Suez Canal Authority said on Tuesday it will temporarily increase a surcharge levied on laden crude oil tankers and petroleum products tankers transiting the canal in both directions to 15% of normal dues from 5%, effective May 1". So that's nice. More costs for the end user. The changes come "… the improvement of ships' economics". Ermmmmm. Hang on. Let me just call my crude oil tanker Captain friend. Computer says nooooo. So do I. Enjoy the weekend. Over and out. 

Daily Oil Commentary

Morning all, it's Thursday, my favourite day of the week, as you all know. Brent is trading this morning up 0.20, no down 0.60 wait wait, up 38, huh? down 1.08. SSSSHHHHHHHH! BRENT IS TRADING THIS MORNING CLOSE TO $120 PER BARREL. ok? God knows where WTi is, that's just as nuts, but if I said close to $113 per barrel would you believe me? Ha. HI, my name's Matt and I'm an oil addict. Oilholics anonymous. Seriously though, on the 24th March 2020 Brent was trading where? Go on. Have a guess. Just go onnn, humour me. Yes? Incorrect! Insert Family Fortunes buzzer. EEERRR ERRRRR. I shall tell you. Brent was trading at $27.15 per barrel on the 24th March 2020. Here we are, two years later, and I'm having trouble forming an argument as to why Brent should be any lower. Yesterday was a case in point - we traded at a low of $114.45 before that was patted away with disdain and we traded up to a high of $122.34. This morning, as you can tell, has been just as frivolous, with a low of $120.35 and a high of $123.74. And breatheeeeee. Nope, no time for that breathing nonsense, back to the oil market. Not that it matters too much anymore but EIA data was what I would call what my youngest daughter does to most of my living rooms walls, draws on everything. The market didn't shoot up, but it certainly gave things a boost and Brent futures continues to stay supported above $120. There is one discussion though that is starting to take shape and that is demand destruction. Now, there are many discussions to be had here and, of course, the higher flat price gets, the more the end user will have to meet those higher costs, I get that. But with so much supply being taken off the market with Russian energy becoming nigh on impossible to finance and ship, it is now taking hold of people’s energy needs. Sure, there will be people who won't jump on a plane and visit the Costa Fortunes, or drive to go and see their Great Auntie Mable as often but I would argue that the latter is negligible (not Mable. I’m referring to the driving long distances etc, you get it. bless her). Demand still needs to be supplied and, right now, there isn't enough oil to meet those demands. I say, "not enough oil". There is plenty of oil, one just can't buy it, and this is being reflected in Urals crude being offered at record low versus dated Brent yesterday (-31.35 per bbl CIF Rotterdam). Where do we go from here? Well, I think the market is looking for cues from Biden's visit and discussions with EU members today but one thing's for sure, prices are not going much further down for quite a while. Good day.