9 May, 2018
So... The oil market has been going crazy in the last few days. On Monday, the US West Texas Intermediate crude for June delivery rose nearly 1.5 percent to reach $70.73 per barrel on the New York Mercantile Exchange.
This has been its highest level since November 2014. And the funny thing about it? US crude production continues to grow steadily week after week. In fact, output levels are dangerously close to Russia - the world’s largest producer to date.
So… what everyone wants to know right now are the reasons behind the rally. And that’s not a single-factored movement, but instead a combination of four factors:
1- OPEC + Non/OPEC Output Cuts
Yes. The deal hasn’t changed much since it was first implemented back in 2017, but the 1.8-million-barrels-per-day cut has been doing well for itself. The agreement was renewed not long ago and it is expected to run until the end of this year.
According to a survey conducted by S&P Global Platts, OPEC’s production dropped in April to a one-year low with only 32 million barrels a day produced last month, down 140,000 barrels a day from the previous month.
2- Stronger Demand
And while supply continues to move down, demand is growing as never before. The International Energy Agency expects demand to reach 99.3 million barrels a day this year, up from 97.8 million barrels a day registered in the prior year.
3- Potential sanctions against Iran
Iran is a major producer of the Organization of the Petroleum Exporting Countries. Imposing new sanctions against it would immediately be reflected on further production cuts.
President Donald Trump said his decision on the Iran nuclear agreement will be announced today. Expectations are pointing at a pull out from the deal.
4- Venezuela crisis
Another report from S&P Global Platts said Venezuela output was at its weakest point in almost three decades. The economic crisis is not expected to improve any time soon and speculation continues to build up for an even worst scenario.
Oil prices extended gains in early trading hours as expectations for further reductions in global supply levels continued to build following Donald...
Last week we have spoken about Warren Buffett's dislike for Bitcoin and the whole cryptocurrency world. Fine... it is not that he doesn't like it...
Markets in Asian traded mixed on Thursday as investors digested a widely anticipated interest rate decision by the US Federal Reserve while looking...
Asian equity markets were mostly higher on Monday, with investors focusing on geopolitical tensions over the Middle East while keeping an eye...
Asian equity indexes moved into green territory on Tuesday despite a weak lead from Wall Street on the back of higher Treasury yields and as traders await...
The light news flow and a break in US-Chinese trade rhetoric give the equity markets a positive momentum amid so far positive reporting season in the US...
UK Average Earnings excluding Bonus (3Mo/Yr) (Feb) is expected to come in at 2.8% from 2.6% previously. Claimant Count Change (Mar) is expected...
Markets in Asia were mixed on Monday amid rising geopolitical tensions following a western air strike over Syria and as investors await for fresh...
Well, the global markets remained under pressure on the background of geopolitical risks and the expectations of missile strikes on Syria. It is...