Oil Fundamental Analysis

[Samirofi]

January 5, 2016


Crude Oil gained 35 cents to 37.40 while Brent Oil added 59 cents to 37.87 as tensions in the Middle East stressed markets. The Saudi – Iran tensions continued to escalate with Saudi Arabia severing diplomatic ties with Iran and Russia offering to intercede as peace maker. During the Asian session overnight the US and international benchmarks rose as much as 3.4 and 2.4 per cent respectively compared to where they had ended 2015, touching close to $38.50 a barrel. But gains were later pared and Brent crude, which determines prices paid around the world including for oil exported from the North Sea, was up just 0.4 per cent to $37.40 a barrel this morning.

The initial rise had been prompted, says CNBC, by the latest flare up between Saudi Arabia and Iran. Following the execution of a senior Shiite Muslim cleric in Sunni-controlled Saudi Arabia, angry Iranians attacked the Saudi embassy in Tehran. This prompted the Saudi government to announce it was severing ties with its rival, with which it has been engaged in a range of proxy conflicts of late across the region.

Benchmark oil and natural gas prices have also slumped, down a third this year and two thirds since the rout began in 2014, as ballooning supply met slowing demand.

“Headwinds [are] growing for 2016 oil,” Morgan Stanley said this week, citing increases in global supply and a slowdown in demand, reflecting a market consensus that meaningfully higher prices are not expected before late 2016

The outlook is expected to trigger a fight for survival across the supply chain, including shippers and private oil drillers, while oil-dependent countries from Venezuela and Russia to the Middle East face smaller revenues.

[Samirofi]

Oil Weekly Fundamental Analysis – February 8-12, 2016


Crude Oil fell 7.79% for the week as traders played pump and dump gains this week sending prices up and down on a roller coaster. Crude ended the week at 31.01 while Brent oil declined 1.76% to trade at 34.13. Oil prices ended the week lower in choppy trading on Friday, snapping two weeks of gains, as a frenzy of speculation about a possible deal between top oil producers clashed with concerns about a growing supply glut.

After a volatile week's trading, much is riding on Sunday's meeting between Venezuelan Oil Minister Eulogio Del Pino and his Saudi counterpart Ali al-Naimi in Riyadh, after Del Pino's discussions with the Qatari and Omani ministers this week.

As cash-strapped Venezuela tries to rally support for concerted action between members of the Organization of the Petroleum Exporting Countries to boost prices, Sunday's meeting is seen "make or break" for a possible deal, said Tim Evans, energy futures specialist at Citi Futures.

Adding to this week's rollercoaster ride in prices was the sudden liquidation of a $600 million leveraged fund bet on falling prices.

Investors were also weighing a string of conflicting indicators on Friday as the dollar recovered some of the ground lost over the past two days while investors continued to fret about growing oversupply, with U.S. inventories hitting record highs last week amid concerns about a slowing global economy.

The pickup in the market earlier this week was not really warranted, Gene McMillian, senior analyst at Tradition Energy said, referring to the market seemingly brushing aside extremely bearish inventory data earlier this week.

[Yousuf Ali]

WTI crude oil traded higher on Tuesday and was seen attempting to build on to its move back above $53.00/barrel mark.
Currently trading around $53.50, optimism surrounding oil output cut agreement between OPEC and non-OPEC members, in an effort to reduce global supply glut, has been the key factor underpinning the black gold. Last month OPEC cartel agreed to cut output by 1.2 million barrels per day, while non –OPEC producers will cut production by 558,000 barrels.
Meanwhile, resurgent greenback buying interest was seen restricting further upside amid thin liquidity in the market. A stronger greenback tends to weigh on commodities priced in the US Dollar, including oil.
Moreover, investors also preferred to wait and see if the agreement actually materialize, and contribute towards rebalancing the oil market, before adding on to their bullish bets. The agreement between OPEC and non-OPEC producers will come in force from January 2017.
With many market participants away for year-end holidays, trading activity is likely to remain subdued ahead of the US weekly inventories report from the API and EIA.

[ashif]

Oil dips but set for biggest yearly gain since 2009.


Oil traded slightly lower on Friday, but was still on track for its biggest annual gain since 2009, after OPEC and other major producers agreed to cut output to reduce a global supply overhang that has depressed prices for two years.


A two-rig rise in the oil rig count in the United States, the ninth weekly increase in a row, as reported by oilfield services provider Baker Hughes Inc (N:BHI), added to bearish sentiments.


But the total count of 525 for the week, the last for the year, was still below last year's level by 11 rigs.


U.S. benchmark West Texas Intermediate (WTI) (CLc1) crude futures were down 18 cents. Or 0.3 percent, at $53.59 a barrel, while Brent (LCOc1) fell 24 cents, or 0.4 percent, to $56.61.


Brent has risen about 50 percent this year and WTI has climbed around 43 percent, the largest annual gains since 2009, when Brent and WTI rose 78 percent and 71 percent respectively.