• 4 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 6 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 8 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 9 hours Schlumberger Warns Of Moderating Investment In North America
  • 10 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 11 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 12 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 14 hours New Video Game Targets Oil Infrastructure
  • 15 hours Shell Restarts Bonny Light Exports
  • 16 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 23 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 1 day British Utility Companies Brace For Major Reforms
  • 1 day Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 1 day Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 1 day Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 1 day OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Alt Text

Footloose Iraq Cannibalizes Saudi Market Share

OPEC’s de-facto leader Saudi Arabia…

Alt Text

What’s Stopping An Oil Price Rally?

Oil prices rallied in Q3…

Alt Text

Oil Prices Spike On Middle East Tensions

Oil prices jumped upwards on…

Panic In Chinese Markets Has Commodity Traders On Edge

Panic In Chinese Markets Has Commodity Traders On Edge

In honor of Bradley Cooper’s 41st birthday, the crude complex is suffering from a hangover – unable to muster a rally after yesterday’s whipsawing sell-off.

We’ve seen a risk-off stance overnight by broader markets, with Chinese equities finishing slightly lower after Monday’s 7 percent slide and subsequent trading halt. The People’s Bank of China fixed the yuan at a weaker rate versus the dollar, and then intervened to prop up the currency from experiencing further downside. The theme of a stronger U.S. dollar is ingrained for the day, putting concrete boots on a crude rally it would seem.

The below graphic from the EIA highlights how weakness across commodityland™ last year was very much a broad-based phenomenon, driven by dollar strength, weaker emerging market demand and ongoing oversupply across many markets…from crude to copper to corn.

As we move into a new year, the theme of a stronger dollar looks set to be ongoing, although the re-balancing of supply and demand fundamentals seems to be a highly expected theme – or at least, a hope. Related: What Comes After The Commodities Bust?

In terms of our dearly beloved energy commodities, hark, four of the five worst-performing commodities last year were from the crude complex:

After yesterday’s deluge of global manufacturing data, there are just a few tidbits to get our teeth into. Preliminary Eurozone inflation data for December was disappointing, coming in at +0.2 percent YoY, versus an expectation of +0.3 percent. Germany’s unemployment rate remained at 6.3 percent, while both Germany and Spain saw greater job losses than expected. In terms of energy-specific data, we get the weekly API report this afternoon at its usual juncture. Related: Oil Companies Shun South China Sea As Geopolitical Tensions Rise

The spat between Iran and Saudi Arabia continues to rumble on, with Kuwait joining the fray by withdrawing its ambassador to Iran. From our ClipperData perspective, geopolitical tension presents the greatest upside risk to the crude market – at least through the first half of the year.

Heightened geopolitical tension, in combination with a large number of short positions, could provide a swift and sharp bout of short-covering, as we saw last year at time of extremes.

The below graphic shows the final CFTC report of 2015, with hedge funds closing out 8.5% of their short positions to 157,559 contracts – taking profits at the end of the year. Nonetheless, shorts remain elevated – indicative of the current bearish mindset in the market – but also presenting the potential for a short-covering price-pop.

 

Gasoline is once again leading the charge in the crude complex as refinery outages persist, although the start up of the Ozark and Platte pipelines after the flooding of the Mississippi River should help keep a rally in check. Retail gasoline prices have kicked off 2016 in style, remaining under $2/gallon on the national average, while diesel is not too much higher at $2.24/gallon. Related: $1 Billion Copper Mine Deal In The Making Here

Finally, according to data from Russia’s Energy Ministry, crude output for December rose to 10.825 million barrels a day, a new post-Soviet record. Russia’s Energy Minister, Alexander Novak, said late last month that they don’t expect production to drop off this year, as investments made two to three years ago will continue to support output. Natural gas production, however, is declining. As its sphere of influence wanes, natural gas production has fallen in the last year to 635 Bcm (61 Bcf/d), the lowest level since 2009.

 

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