Why oil isn't escaping $45-55/bbl range

For much of August, the oil market has shown signs of breaking the $45-55 per barrel range – in which it has been stuck of late – toward the upside. Yet, the moment it hits the upper end of the range, a sell-off ensues.

It can be explained away by merely focussing on the supply side of the argument, i.e. global inventory rebalancing not proceeding at pace, and OPEC’s own compliance faltering. However, that is only part of the explanation. 

Two other variables – China’s demand growth and market perception on what would happen when the current OPEC arrangement ends [in March 2018] – are also influencing trading patterns. 

Admittedly, the Brent forward curve has moved from contango into backwardation, i.e. where prices for immediate delivery are higher than those for later delivery. Conventionally, that is considered a bullish sign for prices since it is indicative of demand outpacing supply in the world of "here and now."

However, the Oilholic is not convinced, as what we are witnessing is a not a conventional market. This blogger remains net short and here are one’s reasons for it via a Forbes post (click here). Have a read, alternative viewpoints are most welcome – just ping an email across. But that's all for the moment folks! Keep reading, keep it crude!

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Google+ click here.

To follow The Oilholic on IBTimes UK click here.

To follow The Oilholic on Forbes click here.

To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2017. Photo: Rig workers © Cairn Energy.

Platts July survey notes 32.82m bpd OPEC output

It seems S&P Global Platt's latest survey of OPEC production is suggesting the cartel's headline output came in at 32.82 million barrels per day (bpd) last month; the highest level so far into 2017.

As expected, its the two members exempt from its cuts of 1.8 million bpd - instituted on paper with 10 other non-OPEC crude producers - who have contributed to rise in production, Libya and Nigeria.

Libya's continued recovery saw the civil unrest ridden OPEC member produce 990,000 bpd in July, up 180,000 bpd from June. Nigeria averaged 1.81 million bpd, up 30,000 bpd on June.

The two exempt countries, along with increased output from Saudi Arabia, with its peak summer air conditioning season in full swing, have sent OPEC's collective output 920,000 bpd above its nominal ceiling of around 31.9 million bpd, when new member Equatorial Guinea is added in and suspended member Indonesia is subtracted. 

Saudi Arabia itself produced 10.05 million bpd in July, according to the survey. Overall, S&P Global Platt's notes that while collective compliance with the cut agreement is strong, "results among individual countries are still uneven."

For instance, OPEC's second largest member Iraq grew production slightly to 4.48 million bpd in July, remaining the "least compliant country" in terms of output above its quota, which is 4.35 million bpd.

Iran, OPEC's third largest producer, also had a slight increase in output to 3.82 million bpd, just above its quota of 3.80 million bpd under the deal, as its barrels in floating storage rose, according to the survey.

UAE oil production likewise rose in July to 2.89 million bpd, above its quota of 2.87 million bpd. Of course, the so-called OPEC/non-OPEC monitoring committee, composed of ministers from Kuwait, Russia, Algeria, Venezuela and Oman, which met in St Petersburg on July 25, has said it plans to enforce compliance much more tightly going forward.

Seeing is believing of course in these 'crude' times.That's all for the moment folks! Keep reading, keep it crude!

To follow The Oilholic on Twitter click here.

To follow The Oilholic on Google+ click here.

To follow The Oilholic on IBTimes UK click here.

To follow The Oilholic on Forbes click here.

To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2017. Photo: OPEC logo on building's exterior © Gaurav Sharma 2015.