Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

Is a big move in oil prices due?

By Brian Noble - posted Monday, 3 July 2017


Despite OPEC’s best efforts, the supply/demand dynamic was not effectively addressed.
Increasing U.S. production and higher domestic rig counts have also undercut OPEC’s attempts to limit supply. At the same time, declining U.S. demand for gasoline has been mirrored by declines in Japan, China and the rest of Asia. All OPEC producers, including the Saudis, have actually increased production in the last two months.

Having said that, increases in U.S. shale production, growth in DUCs and global inventory levels matter.
Limits to Nigerian and Libyan production were simply disregarded by OPEC at its May meeting, while both countries have made a surprisingly robust recovery in terms of production. But the domestic U.S. industry has proved so resilient in terms of using cost-effective technology that inventory levels remain elevated.

Who really believed the OPEC charm offensive?
The 25 May OPEC and non-OPEC member meeting in Vienna was bruited to be make or break. But even with the agreed production cuts and their 9-month extension, the cartel has been unable to keep its act together, as compliance issues are paramount and it is obvious that OPEC members are pursuing their own agendas (OPEC Members Pursue Own Agenda As Glut Persists)

Advertisement

The technical picture was deteriorating.
WTI was unable to break out of its $52-54 upside range. Instead, a pattern of lower highs and lower lows has been apparent since early May. Recently, WTI broke major support at $45, while Brent completed a death cross (Brent Stands at Death’s Door With Bearish Cross Formation: Chart) where the 50-day moving average falls below the 200-day, which last occurred in the latter part of 2014.

Straddle this market or not?
Violent price swings in tech stocks, gold, oil and other asset classes are a result of the preponderance of algorithmic trading plus high levels of leverage prevalent across all markets today. What used to be price discovery is now essentially noise.

Just to reiterate what I said on 6 May 2017 (How Much Further Could Oil Prices Fall?), my one dollar/one euro/one pound (name your currency) bet would still be that oil goes back to the high $20s-low $30s as it did in the winter of 2016 before it goes back above $60.

  1. Pages:
  2. 1
  3. Page 2
  4. All

This article was first published on OilPrice.com.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

3 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Brian Noble writes for OilPrice.com.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 3 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy