“Libya and Nigeria have added 550,000 barrels a day of crude-oil production since October, the month OPEC uses as a benchmark for its cuts, according to figures from the International Energy Agency.
That new output wipes out almost half of the cuts achieved by OPEC’s other members over 1.2 million barrels a day, over 1.2 million barrels a day, even more than they promised last year to slash.”
I’m interested the comment by Ian Taylor:
“However, Libya and Nigeria are pumping out so much new oil that, combined with robust output from the U.S., they are keeping the world well supplied with crude and weighing down prices, said Ian Taylor, chief executive of Vitol Group, the world’s largest independent oil trader.
Mr. Taylor said he doesn’t see oil reaching $60 a barrel this year. “I would be very surprised to see it with a six in front of it before the end of the year,”he said. “I don’t think it’s going to happen.”
Currently the WTI crude oil option with the most open interest is the Dec $60 call, with 64,201 open… The Dec 45 put has over 50,000 contracts open… These active strikes seem to have traced out an expected trading range for WTI…
“Stock prices in emerging markets have historically reflected that higher growth. The Emerging Markets Index outpaced the S&P 500 by 3.8 percentage points annually from its inception in January 1988 to August 2007. But they, too, have stumbled in recent years. The S&P 500 has beaten the Emerging Markets Index by 4.9 percentage points annually over the last 10 years through August.”
Alison Sider and Lynn Cook at the Wall Street Journal discuss the widening Brent/WTI crude oil price spread here…
“A difference of at least $4 makes it attractive for a refiner in countries like China or South Korea to buy oil from shale producers in Texas and North Dakota, said R.T. Dukes, an oil expert with consulting firm Wood Mackenzie.
“Get to a $4 spread and you can take it anywhere in the world,” he said.”
The spread moved above $6 and is now at $5.88… Here is the chart:
Do read the whole thing: https://www.wsj.com/articles/lower-u-s-oil-prices-are-a-shot-in-the-arm-for-crude-exports-1505986208?tesla=y
“NYPost: The Oracle of Omaha once again has proven that Wall Street’s pricey investments are often a lousy deal. Warren Buffett made a $1 million bet at end of 2007 with hedge fund manager Ted Seides of Protégé Partners. Buffett wagered that a low-cost S&P 500 index fund would perform better than a group of Protégé’s hedge funds.
Buffett’s index investment bet is so far ahead that Seides concedes the match, although it doesn’t officially end until Dec. 31.
The problem for Seides is his five funds through the middle of this year have been only able to gain 2.2% a year since 2008, compared with more than 7% a year for the S&P 500 — a huge difference. That means Seides’ $1 million hedge fund investments have only earned $220,000 [through 2016] in the same period that Buffett’s low-fee investment gained $854,000.”
(The interesting part is I thought I was the only one left who still reads the NY Post…)
Here is a chart from Carpe Diem which compares hedge fund returns to the S&P:
“Thanks to surprising summer demand, particularly from exports, inventories of diesel, jet fuel and heating oil were heading into the busy winter at their lowest levels in three years….
Harvey’s effects cost refiners even more production of fuel, raising the possibility of shortages and higher prices if the United States suffers another major disruption or an unexpectedly frigid winter….
U.S. distillate stocks are now at three-year lows for this time of year, and 5.2 percent below their historical average…
The inventory also sets the stage for a bullish run in the diesel market. The 3-2-1 crack spread CL321-1=R, a measure of the profit refineries make from converting three barrels of oil into gasoline and diesel, is at $20.63 a barrel, the highest level seasonally since 2012, and more than $6 above the average during that time.”
Here are distillate stocks compared to the 5 year range from the EIA:
“Many traders are adapting by pursuing what is known on Wall Street as a mean-reverting strategy, generally one that wagers prices will fall when oil is above a certain level and rise when it declines below a threshold.”
There is always a “however”:
“Even practitioners of the mean-reversion trade warn that it can be hazardous. Such trades typically make up a small portion of Mr. van Essen’s fund activity, he said, but his use of it has increased to more than 50% over the past year.
“I don’t think it’s going to last” more than another year, said Mr. van Essen. “Commodities are changing and you have to adapt.””