• 2 hours Conflicting News Spurs Doubt On Aramco IPO
  • 3 hours Exxon Starts Production At New Refinery In Texas
  • 4 hours Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 22 hours Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 22 hours Oil Gains Spur Growth In Canada’s Oil Cities
  • 23 hours China To Take 5% Of Rosneft’s Output In New Deal
  • 24 hours UAE Oil Giant Seeks Partnership For Possible IPO
  • 1 day Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 1 day VW Fails To Secure Critical Commodity For EVs
  • 1 day Enbridge Pipeline Expansion Finally Approved
  • 1 day Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 1 day OPEC Oil Deal Compliance Falls To 86%
  • 2 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 2 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 2 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 2 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 2 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 2 days Aramco Says No Plans To Shelve IPO
  • 5 days Trump Passes Iran Nuclear Deal Back to Congress
  • 5 days Texas Shutters More Coal-Fired Plants
  • 5 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 5 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 5 days Chevron Quits Australian Deepwater Oil Exploration
  • 5 days Europe Braces For End Of Iran Nuclear Deal
  • 6 days Renewable Energy Startup Powering Native American Protest Camp
  • 6 days Husky Energy Set To Restart Pipeline
  • 6 days Russia, Morocco Sign String Of Energy And Military Deals
  • 6 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 6 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 6 days India Needs Help To Boost Oil Production
  • 6 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 6 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 6 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 6 days District Judge Rules Dakota Access Can Continue Operating
  • 7 days Surprise Oil Inventory Build Shocks Markets
  • 7 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 7 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 7 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 7 days Oil M&A Deals Set To Rise
  • 7 days South Sudan Tightens Oil Industry Security
Alt Text

Aggressive OPEC Pushes Oil Prices Up

Oil prices are once again…

Alt Text

Kobe Steel Scandal Could Rattle Nuclear Industry

The scandal at Japan’s Kobe…

Alt Text

Oil Fundamentals Overturn Geopolitical Risk

Geopolitical risk from Iraq and…

Merciless Market Rout Drags Oil Further Down

Merciless Market Rout Drags Oil Further Down

Not a lot going on this morning, except for the small matter of a bloodbath of epic proportions across global markets. After US equity markets got crushed on Friday, the ever-volatile Chinese equity market has not disappointed overnight, getting ab-sol-ute-ly walloped, dropping 8.5% in its daily biggest sell-off since 2007. Regardless of where you want to pin the blame – Chinese economic fears, US interest rate hike worries, or global commodity concerns – risk appetite, along with Elvis, has left the building.

Part of a vicious circle, the rout continues through Europe this morning and across the pond back to the US again; equity markets and commodity markets alike are getting clobbered, as fear feeds upon itself, and selling spurs on further selling. Brent has broken $45, WTI has dropped well into the $30s, and risk aversion is the theme of the day.

Over the weekend, Iran’s Oil Minister, Bijan Zanganeh, has only served to underscore the severe disparities and dislocations in the current global oil market, stating Iran will ‘be raising our oil production at any cost‘ as and when sanctions are lifted. At the same turn he said that Iran endorsed an emergency OPEC meeting to address sliding prices, but that OPEC should make room for Iran’s production once sanctions are lifted. Hum dee dum. Related: Wind Energy Could Blow U.S. Coal Industry Away

Global markets seem to suddenly be aware of the chasmic gap between equities and commodities, and are even more fearful as to where they could reconnect. We highlighted a similar chart to the one below just a few weeks ago. A reacquainting of the two could mean equities dropping by 50% according to the below chart:

In terms of crude, hedge funds have reduced their net-long position in WTI crude to a five-year low last week, while short positions have also increased significantly, getting close to the extreme short positions seen earlier in the year.


Meanwhile, the below chart illustrates how global inventory increases in the past year have helped to pressure oil prices lower. Total global liquids inventories are estimated to have grown by 2.3 million barrels per day through the first seven months of 2015, the highest level of builds since 1998. Related: The Precarious Life Of Energy Engineers In The United States

As the outage at the Whiting refinery persists, Chicago retail gasoline prices remain elevated, but edging lower from their recent highs. Retail gasoline on the national average should now be returning to its seasonal trend of moving lower.


(Click to enlarge)

The graphic below helps to provide a holistic view of gasoline prices across the US. While some states are receiving a good amount of the pass-through from lower oil prices, recent refinery issues have held gasoline prices considerably higher than they should otherwise be in places such as Los Angeles and Chicago:

Related: Why Oil As An Election Issue Is Bad News For Canada


(Click to enlarge)

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • K Yamaguchi on August 24 2015 said:
    The Iranian oil minister has been repeating for a few weeks that they intend to raise production once sanctions are lifted, so hard to believe that's the reason for today's slaughter. Rather, one might have thought it might have been interpreted more positively in that he coupled it with a call for an emergency meeting.

    It is clearly not about Iran wanting to flood the market with oil, although they probably are prepared to do so -- what they are trying to do is position themselves for a larger "market" share of OPEC production and make it clear to Saudi Arabia that those OPEC targets have to be cut in total to lift price. Waiting for shale to falter isn't going to come soon enough, or be enough.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News