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Is The U.S. Really Insulated From A Middle East Oil Outage?

Outage

Friday, January 10, 2020

1. Oil and gold fall on Iran de-escalation

- Both crude oil and gold fell sharply after the U.S. and Iran seemed to back away from the brink of war.

- Gold fell by $70/troy ounce on Wednesday. The de-escalation “led to higher risk appetite among market participants and sparked profit-taking in gold,” Commerzbank said in a note. “This is evident for example in an ETF outflow of eight tons.”

- Brent fell 4 percent on Wednesday, and actually declined by $9 per barrel between the intraday high and the close.

- “This is understandable from a purely fundamental perspective: if there are no supply outages, the oil market will be amply supplied,” Commerzbank said.

2. Brazil ramps up oil production

- The U.S. is no longer the only non-OPEC oil producer adding lots of new supply. Brazil’s pre-salt oil fields are years in the making, but are finally beginning to pay off.

- “The offshore bonanza [in Brazil] continued with another 125,000 b/d m-o-m jump, bringing y-o-y growth to more than 500,000 b/d and total crude supply past 3 million b/d for the first time,” JBC Energy said in a report. “This strong trajectory is something we expect to be maintained for some time yet.”

- The oil is mostly medium-sweet, which will come in handy in a tight medium and heavy oil market.

- Brazil joins the U.S., Guyana, Canada and Norway as one of the top non-OPEC producers in terms of supply growth.

3.…





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