• 3 minutes Australian power prices go insane
  • 7 minutes Wind droughts
  • 11 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 52 mins Is Europe heading for winter of discontent with extensive gas shortages?
  • 11 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Hopes Are Dashed For International Oil Companies In North Iraq
  • 12 hours 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 20 hours The United Nations' AGENDA 2030 - The vision for One World Governance ...an article by the famous Dr Robert Malone
  • 4 days "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 16 mins "Mexico Plans to Become an Export Hub With US-Drilled Natural Gas" - Bloomberg - (See image)
  • 8 hours "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 1 day The Federal Reserve and Money...Aspects which are not widely known
  • 5 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
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

Stronger Dollar And OPEC Inaction Force Crude Below $40

Into the second week of the month we go, and we see the usual dearth of economic data that follows Nonfarm Friday. The only release of note overnight was a disappointing German industrial production print, while we do get some energy-related data via the EIA’s drilling productivity report to tide us over.

The spirit of Louis Prima, who would have been 105 years old today, lives on in the oil market, as there was a whole lot of jumping, jiving and wailing in response to the OPEC meeting conclusion on Friday. The descent into disarray by the cartel has prompted WTI oil to plummet into thirty-dollardom; a strengthening dollar is only serving to strong-arm the crude complex lower.

This week we get our timely triumvirate of monthly oil reports: EIA kicks things off as usual with tomorrow’s Short Term Energy Outlook, while Thursday sees the release of OPEC’s monthly oil report. IEA brings up the rear with its oil market report on Friday. Related: Oil Bust Kills Off 19 Million Barrels Per Day Of Future Oil Production

The chart below (via @jkempenergy) illustrates that short positions held by hedge funds have reached 172 million barrels, almost doubling in the last seven weeks to reach their third-largest position on record:

(Click to enlarge)

While this highlights the extremely bearish mindset of the market, we have to remember what happened the last two times we were stretched to such extreme short positions: at the previous lows in March and August. At these junctures, prices experienced a swift bout of short-covering, propelling prices higher. Related: North America’s Best Shale Patch

Looking at global offshore rigs, even though 40 out of 350 rigs have been taken out of the market in the price rout of the last year, according to analysis from Rystad Energy we need to see up to 100 rigs go offline to halt the supply glut. Related: Global Solar Alliance Sets $1 Trillion Investment Goal For 2030

Zooming in from a global viewpoint to a domestic one, the EIA releases their drilling productivity report today. It is set to underscore the trend that has been in place for much of the year – shale play production drifting lower, led by Eagle Ford and Bakken.

All the while, total US production in September only dropped a mere 0.2% according to EIA, as production growth in the Gulf of Mexico helped to offset the loss from onshore plays. Oil production from the Gulf of Mexico is set to rise by 10% in 2015, as projects come online this year. Accordingly, production in September was up to almost 1.7 million barrels a day.

Finally, today’s quote of the day is the first line of this article, which starts ‘It used to be said of OPEC that it was like a teabag – it only worked in hot water‘. That made me chuckle.

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