• 5 minutes Oil prices forecast
  • 8 minutes Nuclear Power Can Be Green – But At A Price
  • 11 minutes Projection Of Experts: Oil Prices Expected To Stay Anchored Around $65-70 Through 2023
  • 16 minutes Europe Slipping into Recession?
  • 10 mins *Happy Dance* ... U.S. Shale Oil Slowdown
  • 3 hours Socialists want to exorcise the O&G demon by 2030
  • 3 hours Germany: Russia Can Save INF If It Stops Violating The Treaty
  • 3 hours UK, Stay in EU, Says Tusk
  • 16 hours Emissions from wear of brakes and tyres likely to be higher in supposedly clean vehicles, experts warn
  • 2 days Connection Between Climate Rules And German's No-Limit Autobahns? Strange, But It Exists
  • 1 hour How Is Greenland Dealing With Climate Change?
  • 2 days Chevron to Boost Spend on Quick-Return Projects
  • 2 days Conspiracy - Theory versus Reality
  • 2 days Maritime Act of 2020 and pending carbon tax effects
  • 3 days U.S. Treasury Secretary Mnuchin Weighs Lifting Tariffs On China
  • 3 days Regular Gas dropped to $2.21 per gallon today
Alt Text

The Oil Bull Market Is Back

Oil entered a bull market…

Alt Text

Norway’s Oil Production To Fall To 30-Year Low

Crude oil production in Norway…

Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

More Info

Trending Discussions

Crude Sinks As Jobs Report Propels Dollar Even Higher

We reach the penultimate unemployment release of the year, with a lot hinging upon this report. The headline numbers – ironically 154 years after the birth of basketball inventor James Naismith – mean an interest rate hike in December is increasingly becoming a slam dunk.

271,000 jobs were apparently created last month, a country mile away from the expectation of 180,000 (and not even hinted at by Wednesday’s ADP report). The unemployment rate has ticked lower to 5.0 percent, a level not seen since May 2008 (hark, below). Even average hourly earnings ticked up by 0.4 percent in October, indicating the presence of the panacea for disinflation. In summary, the Fed couldn’t have wished for a better report if they were looking for encouragement to raise rates next month.

As we discussed yesterday, the prospect of higher interest rates will propel the U.S. dollar higher, providing headwinds for a crude rally. Hence, as the U.S. dollar rips higher after the surprisingly strong unemployment report…crude is sinking once more. Related: Oil Markets Shrug Off Supply Disruptions In Libya And Brazil

(Click to enlarge)

Unemployment rate, percent (source: investing.com)

Flipping to overnight action, and fun and games were kicked off by Bank of Japan’s Governor Haruhiko Kuroda, who said further potential stimulus measures could be forthcoming should China’s slowdown spur on deflationary pressure.

Across to Europe, and German industrial production in September contracted for a second consecutive month, dropping -1.1 percent versus the expectation of a rebound of 0.5 percent. The UK also saw a worse-than-expected print at -0.2 percent (MoM), while Spain bucked the trend, coming in better than consensus. Brazilian woes continue, with inflation ticking up to 9.93 percent (YoY), a new 15-year high. Related: Is Iran Opening A “Secret Passage” To Asia For Russian Crude?

The below graphic illustrates how low oil prices are weighing heavy on the number of new oil projects being launched (NB, excluding unconventional oil and gas drilling in the U.S.). This huge drop in new projects is causing oil services companies to slash costs and get increasingly more competitive for a lesser number of projects. This is no better exemplified than by Schlumberger, who has seen profits halved in Q3 as revenues were slashed by a third (versus the prior year).

Finally, despite weaker trade between Russia and Japan, Russian crude exports to Japan have rebounded in recent months. Nonetheless, they are still below last year’s pace, dropping to average 242,000 barrels per day so far this year through October. Related: Oil Sands Still Face Pipeline Problems

Our #ClipperData show that Saudi Arabia is seeing its share of the Chinese market drop, as countries such as Russia increasingly compete for market share. Saudi Arabia is, however, seeing its exports to Japan increasing this year, while total Japanese oil imports edge lower. This underscores how the competitive landscape for producers – just as mentioned above for oil services companies – continues to intensify.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




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