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Matt Smith

Matt Smith

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

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Oil Prices Slightly Up On OPEC Optimism

Crude is pushing higher, fanned by OPEC production cut hopes, but kept somewhat in check by rampant US dollar strength on the back of positive U.S. economic data. Hark, here are five things to consider in oil markets today:

1) I was on CNBC Asia last night (clip can be seen here), discussing something we talked about on the blog yesterday: how the IEA projects that fossil fuels could still account for 74 percent of the total energy mix by 2040, while oil demand could be at 103mn bpd.

The chart below shows that the IEA's projected oil consumption of 103mn bpd in 2040 is based on OPEC's market share rising to 50 percent by 2040. Another key point (made in the Bloomberg piece this chart was pilfered from) is that the expected demand growth over the 25-year period equates to 440,000 bpd, roughly a third of the pace seen in the last quarter-century.

(Click to enlarge)

2) On Monday we addressed how OPEC deliveries to Asia are at a record. Drilling down further, we can see that deliveries from Iran into India reached the highest on our records, over 800,000 bpd. For the last three months, Saudi Arabia, Iraq and Iran have delivered over 2mn bpd:

(Click to enlarge)

3) After being completely absent in September, loadings of Qua Iboe have returned to form in recent months after force majeure has been lifted on the grade. Ten loadings of Qua Iboe are expected in January, at a pace of 306,000 bpd.

After the Nembe Creek Trunk line was attacked in recent weeks, it was expected that Bonny Light loadings would be halted. But as the attack appears to have not caused significant damage, we can see flows are down but not out for November so far. January loadings of Bonny Light are expected to be at 218,000 bpd. Related: IEA Sees Oil Price Shock Ahead As Conventional Supply Falls

(Click to enlarge)

4) Today's economic data out in the U.S. has been particularly impressive. Initial jobless claims came in at 235,000 - the lowest since 1973. Meanwhile, housing starts were up 25.5 percent - the most since 1982. This has further added fuel to the fire for a December interest rate hike - hence the U.S. dollar is pushing on at its highest level since 2003. A stronger dollar is hence serving as a counterweight to OPEC production cut optimism today.

5) Finally, Kuwait is said to have renewed a contract to supply Egypt with 2 million barrels of crude per month, after Saudi Aramco has halted product deliveries to the country.

By Matt Smith

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