2019-11-11 • Updated
US crude oil inventories have finally started to decline. The Energy Information Administration reported Wednesday that domestic-crude supplies fell 3.6 million barrels for the week ended April 21—the largest drop so far this year. The oil supply/demand equilibrium might tip into a deficit soon. That will definitely lift the oil prices.
But as you probably know we always manage to find a fly in the ointment. So, we did it this time. Here is the lilt of the countries that won’t allow OPEC to bolster oil prices by curbing supplies.
The outlook for Venezuela’s economy was downgraded after oil prices collapsed in 2014. Since then the situation has deteriorated; as a result of Chavez’s and his predecessor Maduro’s policies, Venezuela’s socioeconomic status declined, with inflation, bribery, poverty and hunger increasing. The present situation in Venezuela’s capital Carcas has the feel of some sort of a final stage for Maduro’s rule. Oil production dropped 10% last year, and it seems like it is going to fall this year too. In case of a government shutdown, political protests and total collapse of Venezuela society, the oil market will lose a substantial share of oil supply. If the political risks recede, and Venezuela’s oil industry pick up, it will a substantial drag for oil prices.
This North African oil producing country is struggling to recover from years of conflict between government and militias. Its oil field used to produce 1.6 mln barrels before the outburst of political crisis in 2011. The country was allowed to be exempted from OPEC output cut deal. It was producing 490,000 barrels a day with Sharara pumping about 213,000 barrels. Sharara isn’t operating at the present moment because of a valve closure on April 9. So, if outages in Lybia persist, and the largest oil industry doesn’t reopen, it will be a significant boost for oil prices. In case of revival of the Libya’s national oil industry (currently targeting 1.2 mb per day by the end of 2017) will have a truly depressive impact on oil prices.
This African country is also exempted from the OPEC cuts, and like Libya it also represents both downside and upside risks to the oil market. In 2016, Nigeria made lots of headlines beacuse of the streak of attack on pipelines from the Niger Delta avengers demanding that all international oil companies leave the region. The attacks inflicted a great damage on Nigeria’s oil infrastructure (the 300,000 bpd Forcados export terminal is still offline). The oil production slumped to a three-deacde low following the incidents. The upside potential in Nigeria is more limited than in Lybia, but the downside risk for oil prices is still in place, as the Avengers backed off.
The imminent comeback of the US shale industry might put additional pressure on oil prices. The Energy Information Administration registered an increase in US oil production by almost 300,000 barrels per day in 2017. The output could grow by additional 400, 000 barrels per day by the end of December.
Russia’s drilling activity is believed to be the largest short-term catalyst to global supplies and oil prices. The extension of OPEC cuts depends on the agreement of this country – one of the largest oil producers in the world.
Crude oil futures surged on Monday due to disruptions in Russian refining capacity caused by Ukrainian drone strikes and Moscow's decision to cut output to comply with OPEC+ targets. The West Texas Intermediate (WTI) contract for May settled at $81.95 a barrel, up $1.32, while the Brent contract for May settled at $86.57 a barrel, also up $1.32. Russia instructed...
Bearish scenario: Sales below 80.00 with TP1: 79.60... Anticipated bullish scenario: Intraday purchases above 80.70 with TP: 81.50...
Brent oil is currently on a bullish trend, facing resistance near $84 and supported by the 200-day EMA. Breaking above this level could lead to a climb towards $90. Short-term support is observed around $80, backed by the 50-day EMA. As summer approaches and travel increases, crude oil tends to benefit from seasonal patterns. Despite temporary setbacks, buying...
Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...
Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.
Bearish scenario: Sell below 1.0820 / 1.0841... Bullish scenario: Buy above 1.0827...
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