Crude oil market

[waltky]

IF oil prices go up - blame Turkey...

U.S. oil eases on profit-taking after rally on Mideast risks
Tue Nov 24, 2015 - U.S. crude oil futures dipped on Wednesday on profit-taking after the prices rallied to a two-week high on the previous session due to heightening geopolitical tensions in the Middle East with Turkey's downing of a Russian warplane.

U.S. crude's West Texas Intermediate (WTI) futures CLc1 shed 16 cents or 0.37 percent at $42.71 a barrel as of 0054GMT. It finished the previous session up $1.12, or 2.7 percent, at $42.87 after hitting $43.46 earlier, its highest since Nov. 11. Brent LCOc1 settled up $1.29, or 2.9 percent, at $46.12 a barrel, after hitting a two-week high at $46.50.

Turkey shot down a Russian warplane near the Syrian border on Tuesday, saying the jet had violated its air space. Russian President Vladimir Putin said the plane warned of "serious consequences" for what he termed a stab in the back administered by "the accomplices of terrorists". U.S. President Barack Obama and French President Francois Hollande pressed Russia on Tuesday to focus its attacks in Syria on Islamic State (IS) militants. The United States and France separately agreed on Tuesday to ramp up military operations against IS in Syria and Iraq and coordinate intelligence on domestic threats following the worst attacks to hit France since World War Two.

Regarding the U.S. crude oil inventories, industry group the American Petroleum Institute data showed on Tuesday that the inventories rose by 2.6 million barrels in the week to Nov. 20 to 488.3 million, compared with analysts' expectations for an increase of 1.2 million barrels. [API/S] [EIA/S] Asian stocks were mixed in early trading on Wednesday. The U.S. dollar was lower, hurt in part as the latest flare up in geopolitical tensions generated demand for safe haven Treasuries and drove their yields lower. The dollar index .DXY retreated from an 8-month peak of 100.000 set on Monday. [MKTS/GLOB]

U.S. oil eases on profit-taking after rally on Mideast risks

 

[JakeStarkey]

Another $ or 3 at the most.

Then back down to 41.

 

[Mr. H.]

The wife and I have discussed selling the house, taking the equity, and moving into an apartment. After the dog dies LOL.
Yeah, it's down to that. I give it 18-24 months before crude markets make an appreciable move upwards.

The bullshit RFS should be repealed. Those ass fucking farmers have been cutting into our market for far too long.

 

[waltky]

Means gas prices likely to stay down for the near future...

OPEC to keep oil output at high level
Saturday, December 5, 2015 - OPEC members decided Friday to keep producing oil at their current high levels, effectively acknowledging their inability to push up crude prices.

An attempt to nudge the cost of oil higher would have involved lowering output. Instead, the organization's endorsement of present output, which is more than 1.5 million barrels a day above the formal ceiling of 30 million barrels, is likely to push the price of oil down further. The ministers of the Organization of the Petroleum Exporting Countries appeared to have little choice. Major producing nations in the cartel were opposed to reducing output. Instead, OPEC is poised to produce more oil.

Iran, which once pumped around 4 million barrels a day and is now down to about half that, is preparing to come back fully on line once it sheds nuclear-related sanctions in a few months. Senior oil official Amir Hossein Zamaninia said last week Iran hopes to bring an extra 500,000 barrels on the market by early next year. He said he hopes the extra output will be accommodated within OPEC's formal ceiling of 30 million barrels a day.

Arriving for Friday's meeting, Iranian oil minister Bijan Namdar Zanganeh said Iran is ready to discuss a ceiling for its production - but only after his country makes a "full return to the market." Iraq is also resurgent. The country has seen the fastest rise in crude production in the world this year. It was pumping more than 4 million barrels a day last month and was responsible for last month's biggest monthly rise in output among all OPEC countries.

And the ministers agreed to readmit Indonesia, to expand their ranks to 13. While that country's production goes mostly for domestic consumption, that move could also add some to the total amount of OPEC barrels on sale. Friday's news pushed oil prices down, with the U.S. benchmark rate sliding 2.7 percent on the day to $39.99.

OPEC to keep oil output at high level

 

[waltky]

Oil prices still on the down side...

Oil falls towards 2015 low on OPEC inaction, strong dollar
Mon Dec 7, 2015 - Oil prices edged closer to 2015 lows on Monday after OPEC failed to agree on a production curb to stem sliding prices and a stronger dollar made it more expensive to hold crude positions. The Organization of the Petroleum Exporting Countries (OPEC) ended its policy meeting on Friday without agreeing to lower production.

For the first time in decades, oil ministers dropped any reference to the group's output ceiling, highlighting disagreement among members about how to accommodate Iranian barrels once Western sanctions are lifted. "A stronger dollar and the aftershock of Friday's OPEC meeting are weighing on the oil market," said Tamas Varga, oil analyst at brokerage PVM Oil Associates in London. Brent crude prices LCOc1, the globally traded benchmark, were down 38 cents at $42.62 a barrel at 0929 GMT, close to their 2015 low of $42.23. U.S. crude CLc1 was trading at $39.42 a barrel, down 55 cents. The dollar .DXY was up against a basket of currencies.

An oil pump jack can be seen in Cisco, Texas​

Analysts at Barclays said the lack of an OPEC production target in its written announcement was a sign of discord. "Past communiques have at least included statements to adhere, strictly adhere, or maintain output in line with the production target. This one glaringly did not," they said. OPEC's output of more than 30 million barrels per day (bpd) has compounded an oil glut, pushing production 0.5 million to 2 million bpd beyond demand and putting many producers under pressure, especially small-sized U.S. shale drillers that have piled up large amounts of debt. Saudi Arabia, the world's biggest oil exporter, is banking on producers of unconventional oil to buckle for output to fall.

Amin Nasser, Chief Executive Officer of Saudi Aramco, said at a conference in Doha on Monday he hoped to see oil prices adjust at the beginning of next year as unconventional oil supplies start to decline. Others disagreed. Patrick Pouyanne, Chief Executive Officer of French oil company Total, said at the same event that he did not expect prices to recover next year as production growth was set to outstrip a rise in demand. "It is not unreasonable to assume that downward pressure on prices will remain for the foreseeable future, as it will take time for low prices to materially scale back production," said analysts at Cenkos Securities. In a sign investors expect prices to remain weak over years to come, WTI forward contracts out to 2024 have dropped below $60 a barrel.

Oil falls towards 2015 low on OPEC inaction, strong dollar

 

[waltky]

Uncle Ferd likes these lower gas prices...

Crude oil holds at seven-year lows as global glut persists
Fri Dec 11, 2015 - Crude oil prices remained at levels not seen since early 2009 on Friday as output in the Middle East continued to rise despite an already huge global glut, with analysts saying the price outlook for the rest of the year and into 2016 remained weak.

Brent crude futures were down 9 cents at $39.64 a barrel at 0745 GMT, not far off almost seven-year lows hit earlier in the session at $39.38 a barrel. U.S. crude futures were at $36.65 per barrel, down 11 cents and still close to Thursday's bottom of $36.38 - the benchmark's lowest mark since February 2009. "The next quarter is going to be particularly tough as we go from a high-demand to a low-demand quarter," said Richard Gorry, director of consultancy JBC Energy Asia. "Can you rule out $20 per barrel? No, you can't," he said, although adding that prices would not likely fall that far.

Gorry said he expected a slow rebalancing of the market towards the end of next year, with production remaining stubbornly high despite low benchmark prices. "A lot of producers are trying to maintain positive cash-flows and that means maximising output, and Iranian barrels are also coming back to the market," he said. The price rout is a result of a huge overhang in production that is fast filling onshore storage sites, which some analysts expect to run out in early 2016. "The market is strongly positioned for further price declines which is proven by the large number of short contracts in the market," ABN Amro said on Friday.

Jefferies bank said that an "inventory overhang is likely to expand significantly through the first half of 2016 and will likely suppress oil prices in the near-term." Soaring output from OPEC member Iraq has been a large contributor to that overhang, with production there doubling over the past decade to around 4.3 million barrels per day, more than enough to meet all of India's daily demand. OPEC as a whole pumped more oil in November than in any month since 2008, totalling 31.7 million barrels per day despite forecasting little demand growth for crude next year in a bid to defend market share.

The cartel's strategy to safeguard market share by pumping at record levels might be working. U.S. shale oil production, the main driver of non-OPEC supply growth, is expected to fall for a ninth consecutive month in January, according to a forecast on Monday from the U.S. Energy Information Administration.

Crude oil holds at seven-year lows as global glut persists

See also:

Islamic State oil is going to Assad, some to Turkey, U.S. official says
Thu Dec 10, 2015 - Islamic State militants have made more than $500 million trading oil with significant volumes sold to the government of Syrian President Bashar al-Assad and some finding its way to Turkey, a senior U.S. Treasury official said on Thursday.

The United States, France, Britain and Russia have vowed to defeat Islamic State, which uses an extreme interpretation of Islam to justify attacks and brutality in large parts of Syria and Iraq that it controls. A U.S.-led coalition is bombing the hardline Sunni group, as is Assad's only big-power supporter Russia, in an attempt to kill its leaders and cripple the oil wells which the group uses to finance its rule and attacks abroad.

An undated still image taken from a video made available by the Russian Defence Ministry in Moscow, Russia December 2, 2015, shows the Turkish-Syrian border crossing. Russia's defence ministry officials displayed satellite images on Wednesday which they said showed columns...​

In one of the most detailed public explanations of Islamic State's oil trade, U.S. Treasury Department official Adam Szubin said militants were selling as much as $40 million a month of oil at the installations which was then spirited on trucks across the battlelines of the Syrian civil war and sometimes further. "ISIL is selling a great deal of oil to the Assad regime," Szubin, acting under secretary for Terrorism and Financial Intelligence with the Treasury, told an audience at Chatham House in London. "The two are trying to slaughter each other and they are still engaged in millions and millions of dollars of trade," Szubin said of Assad's government and Islamic State, also known as ISIS or ISIL.

The "far greater amount" of Islamic State oil ends up under Assad's control while some is consumed internally in Islamic State-controlled areas. Some ends up in Kurdish regions and some in Turkey, he said. "Some is coming across the border into Turkey," Szubin said when asked for details on the money trail. "Our sense is that ISIL is taking its profits basically at the wellhead and so while you do have ISIL oil ending up in a variety of different places that's not really the pressure we want when it comes to stemming the flow of funding - it really comes down to taking down their infrastructure," he said. Szubin said it was unclear whether the $40 million a month estimate could be multiplied over a year. But in remarks prepared for delivery, he said Islamic State had made more than $500 million from the oil trade, but did not give a more specific time period.

'SECURE THE TURKISH BORDER'

 

[Billyjack]

The the CME states that they trade 750,000 options and contracts daily. A contract is 1000 barrels. The liquid oil is around 95,000,000 barrels per day. Therefore 750,000,000 paper barrels are traded daily versus 95,000,000 liquid barrels. I suggest that rather than checking with OPEC or Exxon you check with Goldman Sachs concerning oil prices.

 

[JakeStarkey]

The the CME states that they trade 750,000 options and contracts daily. A contract is 1000 barrels. The liquid oil is around 95,000,000 barrels per day. Therefore 750,000,000 paper barrels are traded daily versus 95,000,000 liquid barrels. I suggest that rather than checking with OPEC or Exxon you check with Goldman Sachs concerning oil prices.

That is interesting but so what. Explain some more, please.

 

[Billyjack]

Oil prices have always been manipulated. From Drake(1859) to Opec(1971) oil prices were kept artificailly low by the major refiners becuase their refinery margins are better at low crude oil prices than high. For the record Exxon is a net crude oil buyer not a seller, they only make money by selling gasoline. In 1971, we had the first Arab oil embargo and then the price was made artificially high when OPEC was able to restrict production and create an under supply situation. Then oil began trading as a commodity in 1981, yet the supply was still short. The first time in history that the market actually reflected the true price of oil was 1986 when prices dropped from around $40/bbl to less than $8/bbl. At that time supply was close to 75 mmbopd versus demand of around 55 mmbopd. Prices stayed low until the 1990's as consumption increased 2 mmbopd/year while the production side was in a depression and created no new supply. Just a little history, sorry.
Goldman and 3 or 4 hedge funds control about 60% of the market trades on the CME. They were caught a few years back making 100,000,000 barrel 24 hour round trip trades to insure their position. In an over supply situation the speculators will control prices not OPEC.

 

[JakeStarkey]

Oil prices have always been manipulated. From Drake(1859) to Opec(1971) oil prices were kept artificailly low by the major refiners becuase their refinery margins are better at low crude oil prices than high. For the record Exxon is a net crude oil buyer not a seller, they only make money by selling gasoline. In 1971, we had the first Arab oil embargo and then the price was made artificially high when OPEC was able to restrict production and create an under supply situation. Then oil began trading as a commodity in 1981, yet the supply was still short. The first time in history that the market actually reflected the true price of oil was 1986 when prices dropped from around $40/bbl to less than $8/bbl. At that time supply was close to 75 mmbopd versus demand of around 55 mmbopd. Prices stayed low until the 1990's as consumption increased 2 mmbopd/year while the production side was in a depression and created no new supply. Just a little history, sorry.
Goldman and 3 or 4 hedge funds control about 60% of the market trades on the CME. They were caught a few years back making 100,000,000 barrel 24 hour round trip trades to insure their position. In an over supply situation the speculators will control prices not OPEC.

Gotcha. I don't agree with all of that, but it is very interesting. Thank you.

 

[waltky]

Oil prices drop again...

Oil prices drop for seventh session on oversupply worries
Sun Dec 13, 2015 - Crude oil futures fell for a seventh straight session on Monday, their longest losing streak since mid-2014, as a forecast from the International Energy Agency (IEA) that the global supply glut was likely to deepen next year dragged on prices.

Brent crude LCOc1 fell below $38 a barrel for the first time since December 2008 on Friday after the IEA said demand growth was slowing while OPEC output remained high. U.S. crude, West Texas Intermediate (WTI) CLc1, settled in the $35 territory for the first time since February 2009. Front month WTI was down 16 cents at $35.46 a barrel by 0410 GMT, while Brent was down 23 cents to $37.70 a barrel.

Both benchmarks have fallen every day since the Organization of the Petroleum Exporting Countries (OPEC) on Dec. 4 abandoned its output ceiling. In the past six sessions, they have shed more than 13 percent each. OPEC has been pumping near record levels since last year in an attempt to drive higher-cost producers such as U.S. shale firms out of the market.

New supply is likely to hit the market early next year as OPEC member Iran ramps up production once sanctions are lifted as expected following the July agreement on its disputed nuclear program, BMI Research said in a note. "All new production will be earmarked for exports," BMI Research said. "In addition to volumes released from storage, Iran will be able to increase crude oil and condensates exports by a maximum of 700,000 b/d by end-2016," it said.

Oil prices drop for seventh session on oversupply worries

 

[JakeStarkey]

Futures this morning for WTI and Brent at 35.27 and 37.29, a decrease of about 1%.

It's going to get much worse.

 

[waltky]

Oil prices startin' to inch back up...

U.S. oil rises, reversing course after nearing 11-year lows
14 Dec.`15 - U.S. crude rose nearly 2 percent Monday, recovering slightly after moving within a hair of 11-year lows, but analysts and traders said it is still too early to declare the market has reached its bottom.

Both U.S. and global benchmark Brent crude have been tumbling downward since an OPEC meeting Dec. 4 at which the oil-producing countries removed their production ceiling, exacerbating global crude oversupply. Monday's close marked the first significant rebound since the meeting. Early in the day, both Brent and U.S. crude futures fell by as much as 4 percent to their lowest levels since the start of the 2008 financial crisis, before turning around midday in the United States. Brent futures for January delivery settled down 1 cent at $37.92 a barrel. U.S. crude rose 69 cents, or 1.94 percent, to $36.31. The two benchmarks began to converge - a step toward eliminating the once-deep discount for U.S. crude - in an indication that the market is shifting structurally.

Early in the session, Brent traded just 13 cents above the $36.20 low set in December 2008. Below that level, it would be at its lowest since July 2004, when oil was rebounding from single-digits lows hit during the 1998 financial crisis and when talk of a commodities super-cycle was just beginning. But the rebound from these near record lows may be short-lived. "Crude cannot sustain any kind of significant rally until we see the fundamentals begin to shift," said Matthew Perry, partner with Kronenberg Capital Advisors. Crude may fall further before the macro-economic changes needed for a recovery occur, he said. "Rebounds off $35 overnight aren't necessarily bullish or a structural change," said Phil Thompson, vice president of market analytics at Mobius Risk Group in Houston. Because the market remains dominated by traders with short positions, the rebound does not necessarily indicate a macro-reversal, he said. "The market's really sore. It's very, very oversold."

Data from the U.S. Commodity Futures Trading Commission (CFTC) on Friday showed money managers, including hedge funds and other big speculators, cut their net longs in U.S. crude oil futures by 12,117 contracts during the week to Dec. 8. This marked a fifth straight week of declines that left their net long position in U.S. crude at 46,919 contracts, the lowest since the CFTC created the managed money category for oil in 2009. [CFTC/] "The hedge fund community is extraordinarily short right now," said Perry. "The fundamentals have not changed for crude oil. We are still expecting an overabundance of supply going into 2016." Crude markets that have been oversupplied due to the U.S. shale boom have seen supply woes compounded by OPEC's latest decision and, more recently, by a Libyan ceasefire agreement Sunday that could bring shuttered crude from that country back online.

MORE

 

[JakeStarkey]

Gartmann today on CNBC said that the Japanese, other Asian, European, and the USA stock markets have all broken the plane of the last few years' growth. He was not willing to say the bull session was over but that he would be very, very neutral on buying or selling. I think crude oil will drop to $30 by the first of January.

 

[SAYIT]

Oil prices have always been manipulated. From Drake(1859) to Opec(1971) oil prices were kept artificailly low by the major refiners becuase their refinery margins are better at low crude oil prices than high...

Those who pump the oil out of the ground find their margins to be higher when the price of crude is higher and, depending on demand, they determine the price by how much oil they pump into the market.

OPEC's inability to limit global supply has driven the price down, not any effort to keep oil prices "artificially low."

Oil prices startin' to inch back up...
U.S. oil rises, reversing course after nearing 11-year lows

Bouncing while searching for the bottom.
Nothing about the supply & demand imbalance has changed since yesterday.

 

[waltky]

A rise in rates is typically negative for oil prices...

Crude prices dip after recent gains as Fed decision looms
Tue Dec 15, 2015 - Crude oil fell in Asian trade on Wednesday, snapping gains that pulled prices back from testing 11-year lows, as investors awaited the outcome of a Federal Reserve meeting, where interest rates are likely to be raised.

West Texas Intermediate CLc1 fell 55 cents to $36.91 a barrel by 0219 GMT after rising more than $1 on Tuesday. It fell to $34.53 on Monday, the lowest since it financial crisis bottom of $32.40, before ending the day higher. Brent LCOc1 was down 33 cents at $38.12. The contract settled up 53 cents at $38.45 a barrel on Tuesday, closing higher for the first in eight days.

On Monday, the global oil benchmark came within 14 cents of a December 2008 bottom of $36.20, unleashing a surge of buying support. "The drop in prices is not surprising after the rally the previous session as the market girds itself for the decision on rates and official figures on inventory levels in the U.S., said Michael McCarthy, chief market strategist at CMC Markets in Sydney. "There haven't been any great shifts in the fundamentals and clearly ahead of, not only the Fed rate decision, but the inventory read that we will receive, it wouldn't surprise me if we maintain a holding pattern until then," he said. The Federal Reserve on Tuesday started a two-day meeting where it is expected to raise rates eight years after a devastating recession opened an era of loose U.S. monetary policy.

A rise in rates is typically negative for oil prices because a hike is likely to prop up the greenback, making crude contracts more expensive as they are denominated in dollars. Markets are already prepared for a 25 basis point increase but will be closely watching the Fed's policy statement for indications of where rates will go next year. In a further sign of oversupply in the market, data released late on Tuesday by the industry group, American Petroleum Institute, showed a surprise build of 2.3 million barrels in U.S. crude stockpiles last week. A Reuters poll of analysts had forecast a 1.4 million-barrel draw instead. Official inventory data is due on Wednesday from the U.S. Energy Information Administration.

Crude prices dip after recent gains as Fed decision looms

See also:

Asia surges as Wall Street gains lifts sentiment before Fed decision
Wed Dec 16, 2015 Asian stocks rose briskly on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in U.S. interest rates, while the dollar held to large gains made as Treasury yields picked up.

Spreadbetters saw the upbeat momentum in equities being retained in Europe and forecast a higher open for Britain's FTSE .FTSE, Germany's DAX .GDAXI and France's CAC .FCHI. The Federal Reserve is expected to announce a hike in interest rates when its two-day policy setting meeting ends later in the day. It would be the first U.S. rate hike in nearly a decade, signaling the beginning of an end to an expansionary monetary policy that has supplied a tidal wave of liquidity to risk asset markets globally. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 2 percent. Shanghai stocks .SSEC edged up 0.8 percent and Australian shares rallied 2.2 percent. Crude oil prices bouncing from multi-year lows buoyed energy-related shares.

Japan's Nikkei .N225 surged 2.5 percent, rebounding from a two-month low struck the previous day as risk sentiment has blown hot and cold ahead of one of the most-anticipated market events this year. "A lot of capital will be looking for a temporary home outside of the U.S. so as to avoid the likely increase in volatility after the hammer falls. And in the context of our current world markets, for many Japan looks like a credible home," said Martin King, co-managing director at Tyton Capital Advisors. On Wall Street Tuesday, the Dow .DJI added 0.9 percent and the S&P 500 .SPX advanced 1.1 percent. Bank stocks, which will likely benefit from higher rates, were among the market leaders.

With a hike seen as a mostly done deal after more than a year of anticipation, investor focus is fixed on how the Fed might opt to pace its tightening cycle next year. The central bank has hinted that it intends to hike rates gradually. "(Fed chair) Yellen should stress data-dependence in following up with further tightening next year and will surely not drop any heavy hints about the timing of the next move. No one can be confident how the dollar will emerge from all this but volatility seems assured," wrote Sean Callow, a senior strategist at Westpac. The dollar index .DXY last stood at 98.126, having gained 0.6 percent on Tuesday.

The dollar gained 0.2 percent to 121.835 yen JPY=, pulling further away from a six-week trough of 120.35 struck Monday. The euro traded near $1.0900 EUR= after recoiling from a seven-week peak of $1.1060. Supporting the greenback, Treasury yields rose overnight as gains on Wall Street reduced the appeal of safe-haven bonds and stable U.S. consumer price data reinforced the case for a Fed rate hike. In commodities, crude oil dipped after gaining for two successive days. U.S. crude CLc1 was down 0.7 percent at $37.08 a barrel. Concerns of global oversupply had sent crude to a seven-year low of $34.53 earlier this week.

MORE

Related:

Fed opens meeting to put an end to crisis era policy
Tue Dec 15, 2015 - Eight years after a devastating recession opened an era of loose U.S. monetary policy, the Federal Reserve on Tuesday began a two-day meeting at which it is expected to turn in the other direction and raise rates in an increasingly normal economy.

The decision will be released on Wednesday at 2 p.m. (1900 GMT), with markets prepared for an initial 25 basis point "liftoff" that would move the Fed's target rate from the zero lower bound to a range of between 0.25 and 0.50 percentage points. It is to be followed by a news conference by Fed Chair Janet Yellen to elaborate on the central bank's latest policy statement. Markets on Tuesday set a positive stage for the Fed's potentially historic turn. U.S. stock indices were up around one percent, bond yields moved higher, and analysts said that after weeks of preparation a surprise decision not to hike would be the more disruptive choice. "Given the strength of the signals that have been sent it would be credibility destroying not to carry through," former Treasury Secretary Larry Summers, a skeptic of the need to raise rates right now, said in remarks published Tuesday on his website.

The rate hike will separate the Fed from major central banks in Tokyo, Frankfurt, Beijing and elsewhere that are all battling to stimulate their economies and generate growth. The initial hike expected on Wednesday will still leave U.S. policy extremely loose, and Fed officials have signaled they will act cautiously from that point forward to nurture a tepid recovery. Markets and analysts will focus on the exact language the Fed uses in its statement to justify the hike and describe how it will evaluate the timing of a second and subsequent steps.

Analysts at TD Securities said they expected the statement and updated economic forecasts from policymakers to take a hawkish tilt that emphasizes every meeting will be "live" for a possible hike. As of September, Fed officials expected perhaps four rate hikes next year. "The statement....should be relatively hawkish. The Fed will look to project confidence," the analysis said. Though modest, the Fed's token first step remains fraught.

MORE

 

[waltky]

Granny says, "Dat's right - we gonna rue the day dey lifted the ban on oil exports...

Oil edges up, but oversupply, strong dollar keep pressure on
Thu Dec 17, 2015 - Oil gained slightly on Thursday, but held close to an 11-year low, pressured by a relentless build in oversupply, and as the dollar strengthened after the U.S. Federal Reserve raised interest rates for the first time in nearly a decade.

Brent crude for February delivery, the front-month contract from Thursday, rose 20 cents to $37.59 a barrel by 1143 GMT. The global benchmark lost 3.3 percent in the previous session. A dip below $36.20 will be the lowest since July 2004. Analysts said such a move in the run up to year-end would be likely. "The price action is likely to remain violent, but the odds are on lower numbers," said PVM Oil Associates technical analyst Robin Bieber. "Stick with the trend. It is not advised to be long."

A gas pump is seen hanging from the ceiling at a petrol station in Seoul​

Government data showed a surprise build in U.S. inventories on Wednesday, adding to a global glut that has contributed to a near 17 percent slump this month alone. Brent has tumbled from a high above $115 in June last year. West Texas Intermediate for January delivery, the front-month contract, was down 17 cents at $35.35. U.S. crude fell nearly 5 percent on Wednesday. Another potential source of supply for international markets would be U.S. crude should lawmakers vote to lift a ban on exports as early as Friday.

The likely lifting of the ban has seen Brent crude's premium to WTI shrink to below $1 per barrel. The premium was above $13 per barrel in March. "OPEC countries are cutting price to get market share, and they'll have to do so even more if U.S. oil comes onto the international market," Jasper Lawler, analyst at CMC markets said. The Fed raised rates on Wednesday, a sign it believes that the U.S. economy had largely overcome the calamity that was the 2007-2009 financial crisis. Higher U.S. rates typically support the dollar, making dollar-priced oil more costly for holders of other currencies and undermining demand.

MORE

See also:

Oil price slide unlikely to scuttle Shell's takeover of BG
Thu Dec 17, 2015 - Royal Dutch Shell's takeover of BG Group may look less attractive after the slide in oil prices but the fact the same investors own nearly half of both firms means the deal is still likely to go through.

Investors holding about 43 percent of Shell's shares also hold 53 percent of BG, according to Reuters data. For example, Blackrock, Franklin Mutual Advisers and Norges together hold more than 12 percent of Shell and nearly 7.5 percent of BG. Investors will be voting separately on the deal at meetings expected next month after the takeover received its final regulatory seal from China this week and a rejection of the takeover could entail losses all round, making it more painful for those with shares in both companies.

Shell's company logo is pictured at a gas station in Zurich​

BG shares would likely collapse, while Shell would lose a rare opportunity to increase its production base over the next few decades by snapping up a smaller company with some key assets, investors and analysts say. "I think the vote will be positive for the deal," said Niels Lammerts van Bueren, portfolio manager at Dutch arbitrage fund TRZ Funds that trades shares in both companies. "Indeed, with the cross-holdings very few holders will be voting against as that will cost them money."

Few investors and analysts have challenged the strategic sense of a merger that will make Shell the world's top liquefied natural gas (LNG) trader and a key player in Brazil's rapidly developing offshore oil production. But the 30 percent slump in oil prices to below $40 a barrel since the takeover was announced in April has left investors worrying about whether Shell will be able to maintain its dividend if the $54 billion takeover goes through.

SHARES LAG

 

[waltky]

Oil heads for third straight weekly loss...

Oil heads for third straight weekly loss as supply weighs
Fri Dec 18, 2015 - Oil prices edged higher on Friday as investors closed positions ahead of the end of the year though crude was still heading for a third weekly loss in a row, its longest losing streak in four months.

Global benchmark Brent crude prices were trading up 38 cents at $37.44 a barrel at 1000 GMT while U.S. crude futures traded at $35.02 a barrel, a rise of seven cents from Thursday's close. A global supply glut that brought prices close to 11-year lows this week means Brent oil prices will post losses for a third consecutive year, which would be the first time that has happened since oil trading started in the 1980s. West Texas Intermediate (WTI) futures are set for a second straight yearly loss, the first time that will have happened for the U.S. oil pricing benchmark since 1998.

Many investors finished closing their books for 2015 on Friday ahead of the holiday break and some expected oil prices to rise further during the day as others closed out positions that had been benefiting from the slide in prices. "I would not be surprised to see some rally today as some kind of pre-weekend profit taking," PVM Oil Associates analyst Tamas Varga said. Still, traders were preparing for even lower crude prices next year by taking up more put options to sell U.S. crude in February should prices fall to $30, $25 or even $20 per barrel, according to Reuters data.

The seemingly unstoppable decline in oil is raising concerns about investment in future supplies, IEA Executive Director Fatih Birol said on Friday in Singapore. "The current low oil price make me worried because it means lower investments in new oil projects," he said. "This year, oil investments declined more than 20 percent and more importantly we expect it will decline next year as well," Birol said. "We have never seen in the last 30 years oil investments decline two years in a row in the world."

Oil heads for third straight weekly loss as supply weighs

 

[waltky]

... 'a surprise drop in U.S. crude inventories' - dat domestic crude Jeb Bush an' his buddies been sellin' off...

Oil up 3 percent after U.S. crude stocks drop, trade thin
23 Dec.`15 - Oil rose more than 3 percent on Wednesday in thin, pre-holiday trading, buoyed by a surprise drop in U.S. crude inventories, but prices stayed near multi-year lows as global supplies remained abundant and OPEC lowered the demand outlook for its exports.

Ahead of the Christmas holiday on Friday, volume in the front-month U.S. crude contract was around 265,000 lots by midday, slightly less than the 294,000 lots on Tuesday, according to Thomson Reuters Eikon data. At 12:40 p.m. EST (1740 GMT), West Texas Intermediate futures <CLc1> were up $1.38 at $37.52 a barrel, while Brent crude futures <LCOc1> were up 99 cents at $37.10 a barrel. A day earlier Brent touched $35.98, its lowest since July 2004.

U.S crude inventories fell 5.88 million barrels to 484.78 million last week compared with a forecast rise of 1.4 million, the Energy Information Administration (EIA) said. "The inventory draw painted a good picture for the bulls because it was larger than a lot of people were expecting," said Oliver Sloup, director of managed futures at iiTrader.com in Chicago. "It's prompting some short covering going into the holiday week and we're seeing some house cleaning by a lot of traders."

Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area where Tidelands Oil Production Company operates near Long Beach, California​

On Wednesday, the front-month WTI contract traded as much as 56 cents over Brent, inverting a long-standing discount following last week's signing into law a bill repealing the decades-old U.S. crude ban. Although no immediate large-scale exports are expected, Enterprise Products Partners on Wednesday said it won its first contract to export U.S. crude oil for trader Vitol in what may become the first such cargo. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) in a report on Wednesday forecast that demand for its crude would be lower in 2020 than in 2016 as rival producers prove more resilient than expected in a low oil price environment.

It forecast 2020 demand for OPEC crude at 30.7 million barrels per day (bpd) versus 30.9 million bpd in 2016 and about 1 million bpd less than it is currently producing. Saudi King Salman said on Wednesday the kingdom was concerned about the stability of the oil market, but added that Saudi Arabia remained committed to further exploration activities in the oil and gas sectors. and Iran is expected to add 500,000 bpd of crude exports next year and Iranian officials have already met with Indian refiners seeking proposals on how to make their crude more competitive.

Oil up 3 percent after U.S. crude stocks drop, trade thin

 

[waltky]

Uncle Ferd don't care - long as he can fill his gas tank for less'n $50...

Low Oil Prices Are Double-edged Sword for Global Economy
December 24, 2015 | WASHINGTON — Experts and investors say low oil prices are likely to continue hurting energy companies and the economies of emerging nations that depend heavily on crude oil exports, even though prices have been rising for the past few days.

Oil prices had been at an 11-year low but started to rise after a report this week said U.S. inventories of crude dropped more than analysts had expected. The change in the balance between supply and expected demand pushed up crude prices, but they're still well below $40 -- drastically lower than the $110 a barrel seen 18 months ago. The lower oil prices have been a boon for oil importers and consumers. Average U.S. gasoline prices have now fallen below 53 cents per liter – an early Christmas present for U.S. motorists who had been paying $50 to fill their tanks, but now can fill the tank for about $37.

Industrial plant strips natural gas from crude oil at Saudi Aramco's Shaybah oil field, Shaybah, Saudi Arabia​

It amounts to a $115 billion boost to the U.S. economy -- or a yearly savings of $555 for every motorist, said Robert Sinclair, spokesman for the U.S. auto club called AAA. “We think it’s something that is going to continue, plenty of crude oil supply still remains. Crude oil futures are pointing to even lower prices as we go forward in the next month or so -- so we could see prices drop another 25 or 30 cents in the next month,” Sinclair said.

Oil-producing nations

For oil-producing countries, the price declines have been bad news, economist C. Fred Bergsten told the HasthtagVOA program. “The Russians lose, the Saudis lose, the Venezuelans lose, U.S. oil shale producers lose; but that is more than offset by the net reduction in consumer costs,” Bergsten said. Key oil exporter Saudi Arabia is seeking to diversify its economy, and is running a budget deficit, while Venezuela is dealing with high inflation and a stalled economy, and oil-rich Azerbaijan was forced to depreciate its currency, the manat, which fell more than 30 percent against the dollar.

Oil technician Majid Afshari makes his way to the oil separator facilities in Iran's Azadegan oil field southwest of Tehran​

Because most commodities are priced in U.S. dollars, some blame the higher exchange rate for price declines. But analyst Peter Cardillo of First Standard Financial said faltering demand and growing supply are far bigger factors. "If you have lower demand on a global scale, and then you have overproduction from producing nations, it's obvious that you're going to have a crash in oil prices, and that's exactly what's happened," Cardiollo said in an interview with VOA in New York.

Consequences