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Did Oil Markets Overreact To The Saudi Purge?

November 6, 2017 Nick Cunningham 0

Saudi Arabia’s powerful crown prince led a massive purge over the weekend, ousting around a dozen royal cousins in a bid to consolidate power. The removal and detentions of so many members of the royal family were ostensibly the outgrowth of an anti-corruption campaign, but the actions put the top security institutions under the control of the king and the crown prince after having been distributed among different family factions for decades. In essence, Crown Prince Mohammed bin Salman (aka, MBS) has ended decades of tradition and has consolidated…

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Is Saudi Arabia’s Oil Strategy Working?

October 31, 2017 Nick Cunningham 0

The IMF estimated that Saudi Arabia will need oil prices to trade at about $70 per barrel in 2018 for its budget to breakeven, a dramatic improvement from the $96.60 per barrel it needed just last year. Saudi’s improvement is the most dramatic out of all the Middle Eastern oil producers, and it also suggests the combination of austerity, cuts to wasteful subsidies, new taxes and economic reforms are starting to bear fruit. The improvement is all the more important because Saudi Arabia and its fellow OPEC members are restraining output as…

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Can $60 Oil Last?

October 30, 2017 Nick Cunningham 0

Brent is back at $60 for the first time in more than two years, but the big question is: Can crude hold onto its gains? Oil prices firmed up in recent weeks, but held back from key resistance points—roughly $60 per barrel for Brent, and around $55 per barrel for WTI. Oil traders were reluctant to test the upper limits of the “shale band” at $60, a threshold that has repeatedly forced traders to liquidate their bullish bets or get burned. Top analysts argue that it would take something really significant to allow oil to break above…

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The Return Of Deepwater Oil

October 30, 2017 Nick Cunningham 0

In a historic auction for deepwater oil assets in Brazil, the oil majors showed up on October 27 and bought several offshore blocks, indicating a high level of interest in the country after a major policy overhaul allowed private investment. Royal Dutch Shell won half of the blocks that were offered, and Shell was already one of Brazil’s largest foreign investors. After purchasing BG Group for around $50 billion, Shell took a large presence in Brazil. The logic behind Shell’s strategy is that the company argues it can breakeven with…

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The Rise Of The Petroyuan

October 26, 2017 Nick Cunningham 0

China is aiming to overthrow the U.S. dollar as the currency of choice for the oil market, a move that could have far-reaching consequences. Since the 1970s, the oil trade has almost entirely been conducted in U.S. dollars, even when buyers and producers are not American. The ramifications of the dollar-denominated oil trade are immense: Because oil is priced in dollars, there is huge demand for dollars, lending the U.S. economic and strategic power.   Beijing hopes to challenge the dollar by setting up a futures market with its own currency,…

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The 5 Countries That Could Push Oil Prices Up

October 23, 2017 Nick Cunningham 0

Oil prices appear to be stuck in the $50s per barrel, but that doesn’t mean there aren’t serious supply risks to the market. An unexpected disruption could occur at any moment, as has happened in the past, leading to a sudden and sharp jump in prices. Geopolitical tension has been largely irrelevant since the collapse of oil prices in 2014, but it’s making a return now that cracks have emerged in some key oil-producing nations. The threat of an outage will carry more weight as the oil market tightens. “The ‘Fragile Five’ petrostates—Iran,…

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Iraq Seizes Kirkuk, Briefly Knocks 350,000 Bpd Offline

October 16, 2017 Nick Cunningham 0

Oil prices spiked on Monday after Iraqi forces seized the oil fields around Kirkuk, which had largely been under Kurdish control since 2014. There were conflicting reports as of Monday, but oil supplies from the region may have been disrupted, although perhaps only temporarily. The military maneuver by Iraqi forces comes as retaliation for the Kurdish independence vote staged a few weeks ago, a move condemned by Baghdad, as well as the governments of Turkey and Iran, both of which have their own Kurdish populations. Iran closed border crossings,…

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IEA: Oil Prices To Hit A Ceiling In 2018

October 12, 2017 Nick Cunningham 0

The global oil market continues to make progress, but the ongoing production gains from non-OPEC countries will probably act as a “the ceiling for aspirations of higher oil prices” in 2018, according to a new report from the International Energy Agency. In its monthly Oil Market Report published Thursday, the IEA cataloged the long list of indicators that suggests the oil market has made huge strides this year towards rebalancing. In the second and the third quarter, the global supply/demand balance was in a deficit, putting total inventories…

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Goldman Sachs: Inventory Drawdowns Will Not Continue

October 12, 2017 Nick Cunningham 0

The September oil price rally was predicated on improving oil market fundamentals, bolstering confidence that the rebalancing process was accelerating. But the inventory declines reported in the third quarter might be “as good as it gets,” with inventories returning to small increases next year, according to a new report from Goldman Sachs. The third quarter appeared to finally be the turning point for an oil market suffering from a more than three-year downturn. The OPEC deal was finally bearing fruit—inventories started posting…

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Is The War On Coal Really Over?

October 11, 2017 Nick Cunningham 0

“The war against coal is over.” That was the claim from EPA chief Scott Pruitt ahead of his announcement that he would rewrite a signature climate change program from the Obama era. On Tuesday, Pruitt’s EPA proposed to withdraw the Clean Power Plan (CPP), a controversial step that seeks to roll back the clock on arguably the most important environmental achievement of President Obama. In fact, some argue that the CPP ranks up there along with the healthcare overhaul as one of Obama’s top domestic policy victories. The Clean…

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