Why Oil Prices Aren’t Going Anywhere… OilPrice.com

by Jim Colburn • Friday, July 21, 2017

Nick Cunningham, at OilPrice.com, suggests that the data is mixed enough to give bulls and bears plenty to make a case:

“One can find whatever they want in the data. Looking for signs that the oil market is moving towards balance? There’s a strong inventory decline for you. Worried that the market is still woefully oversupplied? Yep, there is also data to back up that conclusion – another week of strong production increases.”

“For example, two headlines from the same news outlet, The Wall Street Journal, highlight how interpretations of the health of the oil market can vary depending on the focus. Following the release of the EIA data, the WSJ reported: “Oil Rises on Bigger-Than-Expected Inventory Decline.” But early the next morning, another WSJ article reads: “Oil Struggles After Rise in U.S. Output.””

But we are talking about oil, and oil prices will eventually move sharply somewhere…

Here is a 5 year chart of  the oil VIX, a measure of expected volatility:

 

 

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Commodities are having a tough year… WSJ

by Jim Colburn • Thursday, July 20, 2017

From today’s Wall Street Journal:

 

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Real time prices of power, New York State… NYISO

by Jim Colburn • Wednesday, July 19, 2017

Yeah, it’s hot outside… These are locational based marginal prices for power in different parts of New York as of 5:14 p.m.:

http://www.nyiso.com/public/markets_operations/market_data/maps/index.jsp

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Stock levels… EIA

by Jim Colburn • Wednesday, July 19, 2017

Here are the stock levels for crude oil, distillates and gasoline outright and as “days supply” from the EIA’s This Week in Petroleum:

Crude oil is almost within a bloated 5 year range:

Dare we say that gasoline stocks are looking tighter? Days supply, though, is still close to last year…

Distillate looks a bit more in balance from a days supply perspective, as compared to last year..

 

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Venezuela’s National Oil Company on Its Last Legs… OilPrice.com

by Jim Colburn • Wednesday, July 19, 2017

From Luis Colasante, at OilPrice.com:

“In the last ten years, Venezuela crude oil production has lost more than 500 thousand barrels per day. Since the beginning of 2017, the country has lost 92 thousand barrels per day. Between May and June 2017, Venezuela’s oil crude production has decreased from 1,951 to 1,938 million barrels per day, representing 13 thousand barrels lost in one month, based on the secondary sources used by OPEC.”

 

 

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NY and Atlanta Fed GDP Nowcast updates…

by Jim Colburn • Saturday, July 15, 2017

Updated to include Friday’s economic data, New York is steady at +1.9 GDP growth for 2Q, while Atlanta is now at +2.4%, a new low:

Here are the links:

https://www.newyorkfed.org/medialibrary/media/research/policy/nowcast/nowcast_2017_0714.pdf?la=en

https://www.frbatlanta.org/cqer/research/gdpnow.aspx

 

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US annual energy expenditures.. EIA

by Jim Colburn • Saturday, July 15, 2017

Energy is relatively cheap and should boost or at least not be a drag on the economy (note the increase from 2002 to 2008):

The chart can be found here:  https://www.eia.gov/outlooks/steo/pdf/steo_full.pdf

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Bull market in pork bellies… WSJ

by Jim Colburn • Saturday, July 15, 2017

From the Wall Street Journal:

“Fast-food chain Arby’s Inc. last month introduced a series of “triple thick” bacon sandwiches. Brooklyn-based eatery Landhaus serves maple bacon on a stick. And bacon-themed summer festivals have sprung up in cities across the country.

“Everybody and their mother is coming out with a new bacon sandwich,” said Dan Norcini, a livestock trader in Coeur d’Alene, Idaho.”

Here is the price chart:

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EIA expects $50 oil through 2018…

by Jim Colburn • Friday, July 14, 2017

The EIA expects oil prices to average around $50 through 2018… From Today in Energy:

“EIA now forecasts Brent crude oil spot prices to average $51 per barrel (b) in 2017 and $52/b in 2018. West Texas Intermediate (WTI) crude oil prices are expected to be $2/b lower than Brent prices in 2017 and 2018. Daily and monthly average prices could vary significantly from this forecast because global economic developments and geopolitical events in the coming months have the potential to push oil prices higher or lower than the current Short-Term Energy Outlook (STEO) price forecast.
For example, EIA’s forecast for the average WTI price in October 2017 is $48/b, while the options markets indicate an expected range of WTI prices from $36/b to $60/b (at the 95% confidence interval) based on the recent prices of futures and options contracts for October 2017 delivery.”

Here is the EIA’s chart showing supply/demand balance:

 

 

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Oil Market Report Summary… IEA

by Jim Colburn • Thursday, July 13, 2017

The monthly Oil Market Report released by the IEA is closely watched by energy markets… Here are some highlights:

“Each month something seems to come along to raise doubts about the pace of the re-balancing process. This month, there are two hitches: a dramatic recovery in oil production from Libya and Nigeria and a lower rate of compliance by OPEC with its own output agreement.

In the past few months, Libya and Nigeria have seen their combined output increase by more than 700 kb/d. For fellow OPEC members, who agreed to reduce production by 1.2 mb/d, to see their cut effectively diluted by nearly two-thirds must be very frustrating, especially as their pact has, hitherto, been well observed by historical standards.”

“Meanwhile, preliminary indications suggest that global demand growth, after falling to a three-year low of 1.0 mb/d in 1Q17, rebounded to 1.5 mb/d in 2Q17, with strong year-on-year data for the OECD countries as well as in developing economies. Taking demand and supply together, the current market balance implies a global stock draw of 0.7 mb/d in 2Q17.”

 

 

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