Global Macro Perspectives
The oil price is holding up quite well despite weaker demand and higher stockpiles. The reason for that are tightness in the brent market (which reflects in other markets via. arbitrage) and geopolitical risks (mostly related to Iran nuclear program).
Crude stocks rose 3.5 million barrels; Gasoline stocks were down 0.4 million barrels; Distillate stocks fell 2.5 million barrels; Propane/propylene stocks fell 0.5 million barrels; Other oils stocks fell 2.5 million barrels; Total crude oil and petroleum stocks were down 4.3 million barrels.
The price of crude oil is shaped on one side with fears of global economic slowdown and on the other side western countries efforts to discourage Iranian crude oil buying. In my view, geopolitical risks are keeping the price high.
The rumors are that Saudis had to unload record amounts of physical crude to the markets (from their hedges) because of lack of able counter parties to roll the positions due to shortage of credit.
Crude oil market looks well balanced. Future economic conditions and consequent commodity demand are key here.
Crude oil supply and demand remain balanced. Crude had a tremendous run and it’s starting to look overextended. Brent WTI price spread narrowed on the reversal of Seaway pipeline.
I would say that the market is balanced now and all depends on the economic conditions.
Strong price action in the front end of the curve pushed the WTI into backwardation.
Very strong inventory data is not translating into price strength.
The macro data will be the main factor driving the price of oil. The demand data was strong in the recent weeks, but came tepid in the last reading. The price has moved fast form deeply oversold into overbought, so the risks are to the downside.
On the supply side we had large crude oil draw in the last two weeks because hurricanes in the gulf. Demand anemic. I still believe that the macro data will be the main factor driving the price of oil. Overall I expect volatile trading with no clear trend.
It’s all about global macro picture now and that doesn’t look promising.
With Libya returning to the market soon, further negative pressure possible.
Technically crude oil (WTI) looks heavily oversold. Massive fall in total crude oil and distillates inventory.
Technically crude oil (WTI) looks heavily oversold. On the other side crude oil demand is closely following 2008 path…