Tue, 25th April 2017

Anirudh Sethi Report


Archives of “Crude” Category

Global Oil, Natural Gas Prices to Remain Volatile in 2017 – Moody’s

Global oil and natural gas prices are expected to remain volatile again in 2017, but fluctuate within the $40-60 per barrel range, Moody’s Investors Service said in a press release on Tuesday.

“The rating agency’s oil and natural gas price estimates — within a medium-term oil price band of $40-$60/bbl for both Brent and West Texas Intermediate (WTI) crude globally and in North America — remain unchanged for 2017-19 from its November 2016 update,” the release stated. “Moody’s expects prices to remain volatile within this band.” In North America, the incoming Trump administration is expected to prioritize domestic oil and coal production, benefiting energy infrastructure projects in the short-term. Russia’s agreement to cut oil production is unlikely to hurt its oil companies, but Latin American companies will continue to face funding risk for several years due to tight market conditions, according to Moody’s. The oilfield services and drilling sector will likely be constrained globally by weak demand, overcapacity and high debt levels, the release also said.

OIL – inventory survey shows a bigger than expected draw in US crude stocks

This is the private survey, which comes out ahead of the official data (due today morning US time)

The latest Reuters polling has expectations for headline crude stocks down 1.7mln barrels (I’ve also seen results from that poll putting the expected at a draw of 2.2mln barrels … hmm)
Anyway … the headline draw is far in excess of even the 2.2mln barrels

Oil is looks to shake a streak of new-year blues but quick drop halts rally

WTI crude oil seasonals

Oil is the big story of the first day of 2017 trading.

WTI crude was up more than 2.5% to a session high of $55.24 but has faded back to $53.90 and hardly higher on the day in the past hour of trading. Still, crude is up more than 20% since the OPEC decision on November 30.

A problem for crude is that it’s running into a seasonal squeeze. In January 2016 and January 2015, crude lost more than 9%. In the past 10 years, the average decline in January has been 3.68%.

Saudis Forecast $51 Oil In 2017 Rising To $65 By 2019; Will Spend 20% Of Total Budget On Military

After suffering two record budgets shortfalls in 2015 and 2016 as a result of plunging oil prices, and which nearly brought both Saudi Arabia’s economy and banking sector to a standstill, not to mention billions in unpaid state worker wages at least until generous foreign investors funded the Kingdom’s imminent cash needs with its first, and massive, bond sale ever, today Saudi Arabia released it budget outlook for the next year.

And while the Saudis believe the country’s budget deficit will fall modestly next year even with an increase in spending, it is still set to be a painful 8% of GDP suggesting the Saudi cash burn will continue even with some generous oil price assumptions.

The budget deficit for 2017 is expected decline 33% to 198 billion riyals ($237 billion), or 7.7% of GDP, from 297 billion riyals or 11.5% of GDP in 2016 year and 362 billion riyals in 2015, the Finance Ministry said in a statement on its website on Thursday. In 2016, the finance ministry said its spending of 825 billion riyals ($220 billion) was under the budgeted 840 billion, and the 2016 budget deficit came to 297 billion, below the 362 billion in 2015.


OIL: Price pop a little after private inventory data shows bigger draw than expected

The private survey is available to subscribers to their service for $US2500 a month. Sometimes it even gets close to the real data.

  • Wednesday morning from the US we get the official figures.
  • The latest Reuters poll of expectations have U.S. crude oil inventories to show a draw of 2.4 million barrels in the week to December 16.
Note … the data is showing a bigger draw than that expected

Long-Term Crude Supplies Abroad Not to Drop After Oil Production Cut Deal

In November, OPEC agreed to cut oil production by 1.2 million barrels per day to 32.5 million barrels per day for the whole cartel from next year.

“Intergovernmental agreements will be fully implemented, since cuts are slight and companies will be able to compensate via other activities,” Novak told journalists. Russian Deputy Prime Minister Arkady Dvorkovich added that the deal would not affect oil supplies on the domestic market and stressed that companies would supply as much oil as was demanded, without any substantial rise in prices. On December 10, OPEC finished a meeting with non-OPEC countries in Vienna, at which non-OPEC countries decided to cut oil output by 558,000 barrels per day, with Russia cutting the output by 300,000 barrels per day from January 2017.

Baker Hughes total rig count up 13 in the current week

OIl up 12. Gas up 1

The weekly rig count from Baker Hughes  shows that the recounts  advanced by 13  in the current week, with oil of 12  and gas up one.
The march higher continues the trend from the mid year lows but the number of rigs still stands well below the August 2015 most recent high up nearer the 900 level. 
Crude oil futures are little changed at him $51.65. THe high for the day is $52.02. While the low is $50.50 today.