Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
Gold Price Trend Forecast 2018 - 24th Sep18
The Stock Market Has Been Exceptionally Strong this September. What’s Next for Q4 2018 - 24th Sep18
Gold / US Dollar Inverse Trend Relationship Video - 23rd Sep 18
US and Global Stocks, Commodities, Precious Metals and the ‘Anti-USD’ Trade - 23rd Sep 18
Gerald Celente Warns Fed May Bring Down the Economy, Crash Markets - 23rd Sep 18
Top 3 Side Jobs for Day Traders - 23rd Sep 18
Gold Exodus to Reverse - 22nd Sep 18
Bitcoin Trader SCAM WARNING - Peter Jones, Dragons Den Fake Facebook Ads - 22nd Sep 18
China Is Building the World’s Largest Innovation Economy - 21st Sep 18
How Can New Companies Succeed in the Overcrowded Online Gambling Market? - 21st Sep 18
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

Don't Panic, Nothing Has Really Changed In The Oil Markets

Commodities / Crude Oil Jul 08, 2015 - 11:40 AM GMT

By: OilPrice_Com

Commodities Monday's 8% WTI crude decline is setting up a big opportunity for buyers. And there could be more to come. But this is driven by momentum, not by the fundamental conditions in the physical market.


To the point:

Demand is heading towards record levels both internationally and in the U.S.

The Greek issue is not new and it has not changed. It is just popular now as deadlines are pushed. It will fade and its drag on oil prices will ease.

The Chinese stock market is either correcting or crashing depending on who you listen to but to put it into perspective, the Shanghai Composite Index is off 25% over the last month after a 115% run to the upside over the last eight. Our NASDAQ is flirting now with zero growth for the year. We're still upright. Not that all things are apples and apples but the Shanghai Index is still doing quite well on a relative basis. Oil consumption is unlikely to change based on short term momentum one way or the other here.

The dollar will go where it's going to go and its influence will be strong, but stronger yet will be a balanced crude market which we are approaching.

Should the West come to an understanding with the Iranian government, the 20 to 40 million barrels of Iranian oil in storage will be sopped up quickly in a global market of 93 mm barrels of oil per day (BOPD). No one has a real gauge on this oil and no one seems to know how much actually remains in storage. The extra million BOPD we're reading about is not immediate. This will take time and investment. Adding it to the current world supply straight away is not an accurate assessment, though it does fit into the mindset of the market. Perception is steering the bus, not reality.

North Dakota, the number 2 oil producer in the U.S., saw a 30,000 BOPD decline in April over March numbers. This is a real number reported by the state, not an estimate. And bear in mind that April up north is a lot friendlier to pumpers than March. Never underestimate the effects of weather on oil production. If there are any weak points in your facilities, you'll find them in the cold months.

The EIA production estimates will be revised downward. They have to be. Two months of inventory draws with one weekly increase is a trend in its infancy. Production and inventory cannot be divergent for long.

"More efficient rigs," a concept advanced in the financial news, is a misnomer. Lately operators have been running more sand due to discounting being offered by midcontinent mines. They have also made some adjustments in fluid chemistry that is helping to lower frack costs. But there is nothing more efficient or much different than a well that is fracked today than from one that was fracked at $100 oil a year ago. Four years ago there was, but not one year ago.

A 12 rig increase after 6 months of declines is chicken scratch. A few operators who had leases to hold, or testing to be done, likely waited until county and township roads stiffened up then brought rigs in. It's nothing. If it increases by 200 in a short period of time, you can call me wrong and you'll be right. But after a 60% drop in the count, even 200 new rigs won't come close to balancing the scales.

What has changed with oil in July is the level of patience in the financial markets. This market is a lot like raising kids. Some come home with a paycheck faster than others. But they all will eventually if the fundamentals are there.

Source: http://oilprice.com/Energy/Crude-Oil/Dont-Panic-Nothing-Has-Really-Changed-In-The-Oil-Markets.html

By Dan Doyle for Oilprice.com

© 2015 Copyright OilPrice.com - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

OilPrice.com Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules