• 6 hours Shell Oil Trading Head Steps Down After 29 Years
  • 10 hours Higher Oil Prices Reduce North American Oil Bankruptcies
  • 12 hours Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 14 hours $1.6 Billion Canadian-US Hydropower Project Approved
  • 15 hours Venezuela Officially In Default
  • 17 hours Iran Prepares To Export LNG To Boost Trade Relations
  • 19 hours Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 1 day Saudi Oil Minister: Markets Will Not Rebalance By March
  • 1 day Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 1 day Rosneft Announces Completion Of World’s Longest Well
  • 2 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 2 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 2 days Ecuador Seeks To Clear Schlumberger Debt By End-November
  • 2 days Santos Admits It Rejected $7.2B Takeover Bid
  • 2 days U.S. Senate Panel Votes To Open Alaskan Refuge To Drilling
  • 2 days Africa’s Richest Woman Fired From Sonangol
  • 2 days Oil And Gas M&A Deal Appetite Highest Since 2013
  • 3 days Russian Hackers Target British Energy Industry
  • 3 days Venezuela Signs $3.15B Debt Restructuring Deal With Russia
  • 3 days DOJ: Protestors Interfering With Pipeline Construction Will Be Prosecuted
  • 3 days Lower Oil Prices Benefit European Refiners
  • 3 days World’s Biggest Private Equity Firm Raises $1 Billion To Invest In Oil
  • 4 days Oil Prices Tank After API Reports Strong Build In Crude Inventories
  • 4 days Iraq Oil Revenue Not Enough For Sustainable Development
  • 4 days Sudan In Talks With Foreign Oil Firms To Boost Crude Production
  • 4 days Shell: Four Oil Platforms Shut In Gulf Of Mexico After Fire
  • 4 days OPEC To Recruit New Members To Fight Market Imbalance
  • 4 days Green Groups Want Norway’s Arctic Oil Drilling Licenses Canceled
  • 4 days Venezuelan Oil Output Drops To Lowest In 28 Years
  • 4 days Shale Production Rises By 80,000 BPD In Latest EIA Forecasts
  • 4 days GE Considers Selling Baker Hughes Assets
  • 5 days Eni To Address Barents Sea Regulatory Breaches By Dec 11
  • 5 days Saudi Aramco To Invest $300 Billion In Upstream Projects
  • 5 days Aramco To List Shares In Hong Kong ‘For Sure’
  • 5 days BP CEO Sees Venezuela As Oil’s Wildcard
  • 5 days Iran Denies Involvement In Bahrain Oil Pipeline Blast
  • 7 days The Oil Rig Drilling 10 Miles Under The Sea
  • 7 days Baghdad Agrees To Ship Kirkuk Oil To Iran
  • 8 days Another Group Joins Niger Delta Avengers’ Ceasefire Boycott
  • 8 days Italy Looks To Phase Out Coal-Fired Electricity By 2025
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

Equities Slammed, Oil Rallies As 2016 Kicks Off

Equities Slammed, Oil Rallies As 2016 Kicks Off

Three hundred and seventy-three years after the birth of Sir Isaac Newton, and the crude complex is gravitating higher to start 2016. Newton said that ‘to every action there is always opposed an equal reaction’; this notion is currently absent between Iran and Saudi Arabia, as the execution of a prominent Shiite cleric by Saudi Arabia on Saturday is causing heightened tension and escalating tit-for-tat responses from the two OPEC members.

After the Saudi embassy was attacked in Tehran, the Saudis responded by cutting off diplomatic relations with Iran. The crude complex has accordingly responded by rallying strongly, before being distracted by another lackluster manufacturing print out of China. Gains have been pared, while Bahrain and Sudan have joined Saudi Arabia in cutting off diplomatic relations with Iran, while UAE has ‘downgraded’ relations.

To counter the exchange of barbs betwixt Saudi and Iran, the Chinese PMI manufacturing gauge via Caixin yielded a tenth successive month of contraction for the sector in December, as it dropped to 48.2; below both November’s print of 48.6, and also below consensus of 49.0.

Related: Fueling Star Wars’ Robots, What Powers The Droids?

This prompted a short, sharp, shock to the Chinese stock market, which plummeted 7 percent, triggering circuit breakers……leading to the suspension of operations for the rest of the day. Weak manufacturing data, in combination with the impending lifting of the ban on short-selling at the end of this week, sent a shockwave across Asian markets, to Europe, and finally to the U.S.. Cue a very glum start to 2016 for global equity markets.

Related: Oil Companies Shun South Chinese Sea As Geopolitical Tensions Rise

In terms of economic data elsewhere, Japan and the Eurozone saw both expansion and better-than-expected data for its manufacturing PMIs; impressive prints from both Germany and Italy offset disappointing numbers from France and Spain. The corresponding U.S. print is expected to show minor expansion.

Back to the crude complex, and another quote from Isaac Newton’s provides guidance about how to sum up what to expect in 2016: ‘truth is ever to be found in simplicity, and not in the multiplicity and confusion of things’. Hence a quick peek at the fundamentals in the current oil market give us cause for ongoing wariness of rallies. U.S. production, against the odds, continues to hold up, while OPEC members continue to pump apace. Although oil demand growth is set to be less than last year’s rampant pace of over 1.5 million bpd, the imbalance between supply and demand is set to persist for the coming few quarters, despite some moderating of its size.

Flooding in the Midwest in the last week may well exacerbate the glut of crude at the pipeline crossroads of the world – aka, Cushing, Oklahoma. After Enbridge’s Ozark pipeline was halted due to flooding along the Mississippi River, there is 215,000 bpd which is stuck in Cushing, unable to make its way on the pipeline to Wood River in southern Illinois. This coincides with Cushing inventories reaching a record 62.99 million barrels in last week’s EIA petroleum status report – surpassing the record of 62.2 million barrels achieved in mid-April of last year. Related: Is 2016 The Year Of Wind And Solar?

 

The UK today wins the prize for terrible timing, as the industry body Oil & Gas UK announced today that UK oil and gas production rose in 2015 for the first time in fifteen years, as projects which were started a few years ago (think $100 oil) have come to fruition…as oil hits the $30s.

Finally, 2016 is not just the year of the monkey, but also the year of U.S. energy exports. The lifting of the U.S. oil export ban means that cargoes are starting to leave the U.S. – the first one as of New Year’s Eve – while LNG exports are set to start this month from Sabine Pass. What a difference a decade makes.

By Matt Smith

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




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