Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Smart Money Is Piling Into Oil

Commodities / Crude Oil Apr 10, 2019 - 02:36 PM GMT

By: OilPrice_Com

Commodities

Oil prices jumped to five-month highs this week, pushed higher by a bullish cocktail of supply outages, geopolitical unrest and a sputtering shale sector.

The most recent factor is the sudden eruption of the long simmering feud in Libya between rival factions. The attack on Tripoli by the Libyan National Army (LNA), a militia led by Khalifa Haftar, led to a spike in oil prices on Monday as the market priced in the possibility of supply outages.


One oil export terminal near Tripoli is the most obvious asset at risk. “If this port were to be shut down due to the fighting, this could see a delivery outage of up to 300,000 barrels per day,” Commerzbank said in a note on Tuesday. “The oil market is already undersupplied, so if supply from Libya also falls away the supply deficit will become even bigger.” Brent jumped to $71 and WTI to $64 on the news, the highest level in five months.

Intriguingly, speculators have only recently turned bullish on crude oil in terms of their positions in the futures market. “Indeed, our money-manager positioning index implies that speculative funds only moved from neutral to positive on oil in the latest week,” Standard Chartered wrote in a report on April 9. The investment bank argued that major investors only began to properly factor in geopolitical risk in the last few days, having overlooked risk for much of this year. Standard Chartered analysts said that the “supply security” of Libyan oil is “low,” and that output could decline in both the short and medium term. 

Meanwhile, the U.S. shale industry has already begun to slow down. Weekly EIA data put U.S. output at 12.2 million barrels per day (mb/d) last week, a jump of 100,000 bpd from the week before (the EIA rounds off to the nearest 100,000 bpd on these weekly estimates). More accurate retrospective data found that U.S. production actually declined in January by 90,000 bpd, offering solid evidence of a slowdown.

Most analysts still see strong U.S. supply growth this year, but the gains have slowed significantly. Standard Chartered looked at three-month periods, which it argues shows a clear deceleration in production growth over the past year. “The 3m/3m change peaked at 861kb/d in August, and has declined since, reaching just 140kb/d in March,” the investment bank wrote.

Goldman Sachs argues that these bullish factors will continue. “We expect the drivers of this deficit to persist through 2Q19: the ‘shock and awe’ implementation of the OPEC cuts, global activity sequentially accelerating, further tightening of US oil sanctions and an only moderate increase in shale production for now,” Goldman analysts wrote in an April 8 report. However, the investment bank said that prices could begin to decline in the second half of the year as OPEC+ begins to unwind the production cuts and U.S. shale picks back up. On top of that, some “long-cycle” projects could hit the market in 2020, leading Goldman to project a $60 Brent price for next year.

In fact, while the oil market is moving very much in an upward direction, not everyone believes that it will last. “The mood is increasingly turning bullish, but several feedback loops are about to start spinning that stand in the way of a prolonged oil rally,” Norbert Ruecker of Julius Baer told Reuters. “Russia already signaled its willingness to raise oil output from June. Fuel remains costly in emerging markets, with soft currencies adding to high oil prices.” Russian President Vladimir Putin said at a forum in St. Petersburg that he was comfortable with oil prices where they are, and seemed to suggest that his government was not yet sold on the idea that OPEC+ should extend production cuts.

The higher prices go, especially over such a short time period, the more that cracks will begin to surface in the OPEC+ group. Saudi Arabia clearly wants to stick with the cuts, still smarting from the downturn last year. Russia is less keen.

Meanwhile, some economic concerns still linger. The IMF warned about slowing growth, expecting global GDP to expand by 3.3 percent this year, down from 3.6 percent last year. One glaring weak spot is the fact that emerging market currencies are lagging far behind the rally in commodities and global equities. Higher oil prices and a persistently strong U.S. dollar have put pressure on an array of currencies, and the weakness will make crude oil much pricier in many countries. That, in turn, could dampen demand.

Nevertheless, declining output in Iran and Venezuela, and the threat of severe outages in Libya, at a time when U.S. shale growth has slowed is a powerful combination pushing oil prices to new highs.

Link to original article:https://oilprice.com/Energy/Crude-Oil/Smart-Money-Is-Piling-Into-Oil.html

By Nick Cunningham of Oilprice.com

© 2019 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

© 2005-2019 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