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

Why U.S. Crude Exports Are Booming

U.S. crude oil exports are…

Alt Text

The Next Big Digital Disruption In Energy

Blockchain technology is transforming the…

Alt Text

Oil Fundamentals Overturn Geopolitical Risk

Geopolitical risk from Iraq and…

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

U.S. Dollar Damaging Hopes Of A Rally In Oil

U.S. Dollar Damaging Hopes Of A Rally In Oil

Remember, remember the 5th November, for Guy Fawkes attempted to blow up the UK Houses of Parliament some 410 years ago. Onward to today, and bulls are trying to ignite a rally after prices exploded to the downside yesterday.

Fireworks abound, for not only is it bonfire night, but it is also Nonfarm Friday Eve. Tomorrow we get the latest official monthly jobs report, which will help to endorse or discourage an interest rate hike in the U.S. next month. Hence, as this pushes and prods the U.S. dollar around, it is directing the commodity complex also (case in point: yesterday’s super-charged U.S. dollar sent crude prices spiraling lower).

Things have been quiet in Asia on the economic data front overnight, while there were a few tidbits of note out of Europe. One was Eurozone tales of retail sales, which were down -0.1 percent in September on the prior month, versus the expectation of a 0.2 percent rise, while the Bank of England kept interest rates at 0.5 percent – where they have been since March 2009 (hark, 80 months and counting) amid a dampened inflation outlook.

Brazil’s services PMI showed an ongoing swift pace of contraction, but rebounding from the lows of recent months. Onto the U.S., and weekly jobless claims rose to a 5-week high of 276,000, not boding all that well for tomorrow’s official monthly unemployment data. Related: OPEC Infighting Reaching Critical Levels

Onto our dearly beloved energy complex, and natural gas is set to reach a record level of storage with today’s report. Consensus is for a ~60 Bcf injection, which is well below last year’s +90 Bcf, but just a smidge above the five-year average of +58 Bcf. With storage currently sat at 3,877 Bcf, we only need an injection of +53 Bcf to surpass 2012’s peak of 3,929 Bcf. Game on!

(Click to enlarge)

Switching from gas to oil, and the crude complex is trying to muster a bounce after yesterday’s drubbing, but once again faces a buffeting from the U.S. dollar. Immediate tighter supply concerns offset the longer term picture of ongoing oversupply, with a worker’s strike in Brazil at state-run oil producer Petrobras impacting production. According to estimates, about 140,000 barrels per day are offline, or ~6.5 percent of total production. Related: North Dakota No Longer Attractive For Drillers Or Refiners

As we mentioned yesterday, the U.S. trade deficit has narrowed to $40.8 billion, driven by petroleum imports dropping to their lowest level since May 2004 (APLBTE….all paths lead back to energy). Given the slump in oil prices, trade with Canada has dropped considerably to $438.1 billion year-to-date. Meanwhile, trade in goods with China has reached $441.6 billion. This is the first time China has surpassed Canada in data going back to 1985.

Finally, in relation to the impact of an interest rate hike in the U.S. on the movement of the U.S. dollar, the below is rather telling. Given the inverse relationship between oil and the dollar, ongoing headwinds for a crude rally seem to be the order of the day. Related: Oil Sands Still Face Pipeline Problems

 

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