• 5 minutes 'No - Deal Brexit' vs 'Operation Fear' Globalist Pushback ... Impact to World Economies and Oil
  • 8 minutes China has *Already* Lost the Trade War. Meantime, the U.S. Might Sanction China’s Largest Oil Company
  • 12 minutes Will Uncle Sam Step Up and Cut Production
  • 3 hours China has invested btw $30 - $40 Billon in Canadian Oil Sands. Trump should put 10% tariffs on all Chinese oil exported into or thru U.S. in which Chinese companies have invested .
  • 18 mins Tit For Tat: China Strikes Back In Trade Dispute With U.S. With New Tariffs
  • 13 hours Iran Is Winning Big In The Middle East
  • 2 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 8 mins It's Not the Job of the Government to Dictate Where Businesses Should Go
  • 11 hours Strong, the Strongest: Audi To Join Mercedes, BMW Development Alliance
  • 14 hours IS ANOTHER MIDDLE EAST WAR REQUIRED TO BOLSTER THE OIL PRICE
  • 1 day Trump cancels Denmark visit amid spat over sale of Greenland
  • 15 hours Not The Onion: Vivienne Westwood Says Greta Thunberg Should Run the World
  • 23 hours OPEC will consider all options. What options do they have ?
  • 12 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 7 hours Recession Jitters Are Rising. Is There Reason To Worry?
  • 13 hours Philadelphia Energy Solutions seeks to permanently shut oil refinery - sources
Alt Text

Buying The Dip In The Markets

Worries about the U.S., China…

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

Volatility Off The Charts As OPEC Meets In Algiers

As OPEC members finally (finally!) gather in Algiers, market movement is set to be dictated by every word, facial expression and gesticulation - the like of which has not been seen since Janet Yellen in the last Federal Reserve meeting. Despite speculative short positions increasing in the latest data, a glimmer of hope for progress in Algiers is buoying prices. Hark, here are six things to consider in oil markets today.

1) After the force majeure on Bonny Light was lifted earlier this month, the bombing of an oil export pipeline by militants has taken the grade offline once again.

As our ClipperData illustrate below, export loadings of Bonny Light had ramped up this month to their highest since March, before this latest set-back. Exports of Qua Iboe have also been completely absent this month. These two grades accounted for ~500,000 bpd of Nigerian exports last year, but have been averaging below half that in recent months.

(Click to enlarge)

2) The latest CFTC and ICE data show a massive increase in bearish positions by speculators, as money managers lose faith in progress from this week's gathering of OPEC members. The net-long position has not only been dragged lower by the addition of short positions, but by shrinking long positions also.

(Click to enlarge)

3) There's a nifty graphic out by the FT today, which shows the August production levels of OPEC members versus their average through the first half of the year. As rumors and murmurs circulate about a potential production cut proposal from Saudi, the image below highlights that many have increased output this year.

With Libya, Nigeria, Iran and Iraq already indicating they support a production freeze - but are unwilling to participate - production ceilings above current levels seems the more likely development from the cartel; something which will have a minimal effect on the market.

(Click to enlarge)

4) As OPEC production on the aggregate continues to increase, the supply cushion that the cartel provides to the market continues to shrink. Spare capacity is now down to the lowest level since 2008, with EIA estimating it at just 1.1 million bpd last month.

A lack of spare capacity could leave the market exposed to a price spike should there be a sudden material outage. One other cushion, however, comes in the form of OECD oil and product inventories - which sit at a record 3.1 billion barrels, according to IEA.

(Click to enlarge)

5) The chart below is from an OPEC secretariat background paper for today's IEF forum in Algiers, which takes a longer-term look at oil market developments. Related: Kuwaiti’s Disgruntled By Slashed Fuel Subsidies

The global population is expected to increase from 7.2 billion in 2014 to 9 billion in 2040, with the global economy expected to more than double over this period. Developing nations are expected to account for three-quarters of this growth, with China and India making up half of this growth.

Global energy demand is set to increase by 50 percent by 2040, with oil and natural gas expected to account for just over half of the global energy mix. The reference case expects demand to increase to 110 million bpd:

(Click to enlarge)

6) Finally, ClipperData's fearless leader, Abudi Zein, is presenting a webinar on Wednesday, titled 'When will the oil market rebalance?'. You can register here. Trust me, it will be well worth it.

By Matt Smith

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage


Leave a comment
  • Barack Obama on September 26 2016 said:
    Interesting to read the word "hark" - last time I came across such distinguished vocabulary was December 25.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play