• 2 minutes California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 6 minutes China and India are both needing more coal and prices are now extremely high. They need maximum fossil fuel.
  • 11 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 21 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 4 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 14 hours "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 6 hours Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
  • 2 days Did China cherry-pick the factors that affected the economic slow-down?
  • 40 mins Putin and Xi have decided not to attend the Climate Summit in Glasgow
  • 18 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 21 hours Are you aware of Oil Price short videos on our energy topics?
  • 1 hour The Climate Scare Stories Began With Far Left Ideology Per GreenPeace Co-Founder
  • 1 day Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 1 day NordStream2
  • 411 days Class Act: Bet You've Never Seen A President Do This.
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

Premium Content

Oil Prices Slammed As Dollar Suddenly Breaks Out

Another week kicks off with oil under the influence of OPEC and producer rhetoric. As prices fell below the psychological support at $50/bbl, hark, here are five things to consider in oil markets today:

1) Venezuelan President Nicolas Maduro was in Saudi Arabia yesterday to discuss oil market stability, while scrutiny of his country's economic situation increases, and bankruptcy fears rise.

As our ClipperData illustrate below, 60 percent of Venezuela's oil exports go to three countries: the U.S., China and India. While flows to the U.S. make sense, not only given its proximity, but given how the sophisticated refineries on the U.S. Gulf coast are able to refine Venezuela's heavy crude.

Citgo's Corpus Christi and Lake Charles refineries on the U.S. Gulf further solidify crude flows betwixt the two nations. The U.S. has been the destination for just under a third of Venezuela's crude exports this year, ticking slightly higher from last year.

India's share of Venezuelan exports has also increased this year, at 19 percent through September, compared to 16 percent last year. As Russia's ties with India grow ever closer amid acquisitions and joint ventures, Venezuela is likely to benefit as Russia pivots towards Latin America for supply, as opposed to its adversaries in the Middle East.

China's share of Venezuelan crude has also ticked one percent higher in the last year, up to 9 percent. Venezuela's relationship with China is one of necessity, however, than one of choice. For China has loaned Venezuela $45 billion over the last decade, with the debt to be repaid in oil.

If this isn't bad enough, the drop in oil prices means that Venezuela has to send twice as much to service its debt, compared to when prices were twice as high at $100/bbl.

(Click to enlarge)

2) OPEC rumblings continue on, with Iraq again reaffirming its production is at 4.7 million bpd, despite secondary estimates pegging it materially lower. There are various technical OPEC meetings later this week, from which we may hear rumors and murmurs of country allocations in the context of a production cut. The fun never stops, does it?

Both speculative long and short positions shrank in the latest CFTC data, as conviction wanes from both bulls and bears about what happens next. (Sticking to $50 like glue?). Related: Why A Fracking Revolution In The UK Is Nearly Impossible

(Click to enlarge)

3) The below graphic lists ten of the largest oil and gas companies in the U.S. that have declared bankruptcy since the beginning of last year. Yet while vast sums of money have been put at risk, their production is projected to be around the same levels as prior to declaring bankruptcy.

Ultra Petroleum is a great example. While it is yet to emerge from bankruptcy (since declaring it in April), it has been renegotiating rig contracts, and is set to add another rig within months. Other companies, such as Halcon Resources and Sandridge Energy, have raised more cash by issuing more debt while still in the throes of bankruptcy. That's investor confidence for you.

4) The chart below from EIA today shows how producer short positions are close to nine-year highs, as they rush to hedge their production amid higher oil prices. Related: Oil Prices Fall As Iraq Goes Rogue, Refuses To Scale Back Production

Such voracity for price certainty highlights two things: they think current prices are good value, and secondly, that the price volatility of the last two years has encouraged a greater modicum of risk aversion.

(Click to enlarge)

5) Finally, it would appear that the recent oil rally has fully worked its way into retail gasoline prices, and now that oil has leveled off, we should see gasoline resuming its end-of-year price descent as refineries return from fall maintenance and demand ebbs.

(Click to enlarge)

By Matt Smith

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News