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Wed, 22nd February 2017

Anirudh Sethi Report

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Archives of “Crude” Category

OIL – private inventory data shows bigger than expected draw in stocks

Official oil stock data comes out from the US on Wednesday morning. This is a private survey.

Wires reporting a larger than expected draw in crude oil stocks for the week just gone.
more to come. Oil price up a few cents after the data.
Oh, and as a ps. This is from S&P Global Platts Oil Futures Editor Geoffrey Craig and might be interesting. You may have seen it already, but if not (in brief):
  • Crude oil stocks expected to draw 1.7 million barrels
  • U.S. crude oil inventories top 488 million barrels (37 million barrels greater than levels at the beginning of 2016)
  • The return of refiners from autumn maintenance will likely help eat away at this surplus, as inventories tend to decline at this time of year with crude demand picking up.
  • Analysts see plenty of upside still for crude demand until the next round of seasonal repairs begins (typically in January)
  • A key question facing the market is whether the winter turnaround will coincide with a rebound in U.S. crude oil production, a scenario that would fly in the face of the OPEC production cut and put upward pressure on U.S. inventories.

OPEC Oil Production Hits New All Time High As Brent Surges To 16 Month High

The greatest trick OPEC ever pulled was convincing the world to buy oil even as production kept rising to new all time highs. Case in point, just out from Reuters:

  • OPEC NOVEMBER OIL OUTPUT RISES 370,000 BPD MONTH/MONTH TO 34.19 MILLION BPD, HIGHEST IN RECENT HISTORY – REUTERS SURVEY
  • SAUDI SUPPLY EDGES DOWN ON REFINERY MAINTENANCE AND REDUCED DIRECT CRUDE BURNING – REUTERS SURVEY
  • OPEC OUTPUT RISE LED BY ANGOLA; NIGERIA, LIBYA AND IRAQ ALSO PUMP MORE

Meanwhile, oil rose to fresh 16 month highs, with Brent rising above $55 for the first time since mid-2015.

 

Oil keeps gushing higher as non-OPEC producers line up to join in

With stage one of the OPEC deal done and dusted, the next part of the plan is to get all the non-OPEC nations onboard. OPEC’s Barkindo has set up meetings for Dec 10th and so far 14 countries are on the Vienna invite list;

  • Mexico
  • Oman
  • Kazakhstan
  • Bahrain
  • Colombia
  • Congo
  • Egypt
  • Russia
  • Trinidad & Tobago
  • Turkmenistan
  • Azerbaijan
  • Bolivia
  • Brunei
  • Uzbekistan

Whether they all turn up or if more are added remains to be seen but the market is being boosted by the fact that the wheels are in motion. What also remains to be seen is whether OPEC hits any snags in getting some or all of these countries to do their bit as if not, the whole thing could unravel. With OPEC looking at 600k in cuts from non-OPEC, of which Russia is onboard for half of that, it’s shouldn’t be too hard to achieve. However, this is oil and you can never say never.

In the meantime, Brent has broken into the $55 area and ran to a high of 55.30. That hasn’t been sustained though and we’re back under to trade around 54.80, with 55.00 resisting now.

An Update For Forex ,Crude

The US dollar rose more than 8.5% against the yen in November, and finally at the end of the month, speculators finally switched to a new short position for the first time this year.  
In the CFTC reporting week ending November 28, speculators added 12.1k contracts to their gross short position, lifting it to 72.4k contracts. Speculators added a little less than one thousand contracts to the gross longs, which then stood at 72.1k contracts.
Since peaking in early October near 102k contracts, 30k gross long contracts have been liquidated.  Over the same period, almost 40k contracts have been added to the gross short exposure.  The result is that the net position is short about three hundred futures contracts.  That leaves the Australian dollar as the only currency futures we track in which speculators are still net long.  And even there they are back.
During the latest reporting period, speculators liquidated 8.7k long Aussie futures contracts, bringing the position down to 54.8k contracts.  About 1.1k contracts were added to the gross short position, so it stood at 33.8k contracts.  The net long position fell by a third to 21.0 contracts.
Growing the gross short yen futures was the largest speculative position adjustment, but speculators were also active in euro futures.  The bulls added 9k contracts to the gross longs (to 136.1k), while the bears grew the gross short position almost as much (8.9k contracts to 255.3k).

CRUDE -GOLD :Crucial Update

CRUDE OIL UPDATE

As Expected BASE METALS + GOLD + SILVER …………………Crashed !

CRUDE + NG :SKYROCKETED…………………

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OPEC agrees to cut by 1.2 mbpd to 32.5 mbpd

hat’s means the full proposal from Algiers was accepted and that the paper circulated yesterday was agreed on. That’s the close high end of what the oil bulls would have hoped for but it’s less than the rumored 1.4 mbpd earlier.

WTI is at $48.79, testing the November highs.

I’m a bit surprised we aren’t seeing fresh highs.

Update:

Reuters, citing a source, is now also confirming a cut.

If this is all the bulls can muster, you have to respect the risk of a ‘sell the fact’ type of trade.

WTI Crude Shrugs Despite Biggest Cushing Inventory Build In 21 Months

With OPEC headlines driving every tick today (and machines seemingly going to sleep late on), we suspected tonight’s API inventory data would be a non-event and the reaction was indeed muted as crude inventories drewdown 717k barrels (against expectations of a 577k build). The bigger deal was much more than expected builds at Cushing (biggest build since March 2015) and also notable builds in Gasoline and Distillates.

API

  • Crude -717k (+577k exp)
  • Cushing +2.3mm (+26k exp) – biggest since Mar 2015
  • Gasoline +3.36mm (+1.19mm exp) – biggest since Jan 2016
  • Distillates +2.24mm (+1.45mm exp) – biggest since Sept 2016

The biggest Cushing build since March 2015 and despite a small crude draw, products also saw notable builds…

OPEC odds at 50/50

OPEC watchers see even odds of a deal

Interesting tweets from Bloomberg Chief Energy Corresponded Javier Blas.