The myth of oil market rebalancing has been a great money-maker for financial markets. Hedge funds were the first to benefit in H2 last year, as Reuters has reported, when: “OPEC and some of the most important hedge funds active in commodities reached an understanding on oil market rebalancing during informal briefings held in the […]
“Sometimes I’ve believed as many as six impossible things before breakfast.” Oil traders know how the Queen felt in Lewis Carroll’s famous book, Alice Through the Looking-Glass. The list of impossible things that they are being asked to believe grows almost by the day: Last week, prices jumped 4% on the basis that strong […]
Both the US and Iran are likely to be moving oil into world markets early in the New Year. The lifting of the US export ban has led to early announcements of oil sales: Vitol will move the first cargo via the Enterprise terminal in Houston in early January. Iran is expecting to have sanctions lifted around the same […]
The oil market was the first to feel the impact of the Great Unwinding of policymaker stimulus nearly a year ago. It had completely lost its key role of price discovery due to the liquidity being supplied by the central banks. This had overwhelmed the fundamentals of supply/demand. And we are still living with the consequences […]
The first half of 2015 was the worst half-year for force majeures in the chemical industry since reliable data became available via ICIS news in 2005. As the chart shows, there were 479 reports of outages, more than double H1 2014 and well above the previous peak of 375 in H1 2011. This is absolutely […]
In recent years, financial markets have believed that “everything is for the best in this best of all possible worlds“. Good news has taken markets higher. So has bad news – as investors assume policymakers will apply more stimulus. As a result, a whole generation of managers and analysts has grown up without having to learn the fundamentals of supply/demand analysis. And […]
Yesterday’s post described how OPEC oil producers are seeing their export sales to the US start to disappear. But this, of course, is only one side of the story. As the chart from the Wall Street Journal shows, Saudi needs a $93/bbl oil price to balance its budget. Most of OPEC needs a higher price. Only Kuwait, UAE and Qatar need […]
Iran has been at the centre of all the major oil market price spikes in the past few decades: Today’s record prices on an annual basis are partly due to market fears over supply disruptions due to the Iran/Israel nuclear issue Fears over a nuclear showdown also led prices to jump to $150/bbl in July 2008, when the […]
Oil markets have weakened significantly since they fell out of their major ‘triangle’ formation earlier this month. WTI is already within the forecast $60-80/bbl range although, as the chart shows, Brent still maintains a $10/bbl premium at $90/bbl. Of course, charts can only display the change in sentiment and direction. They cannot explain why it […]
Remarkably, crude oil prices are continuing to trade in their triangle formation. As the chart shows, they tried to break out higher in recent weeks. But there was no follow-through. The high-frequency traders were clearly hoping the US Federal Reserve would announce a new round of quantitative easing (QE3), and provide the firepower for a […]