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OT: Oil

This is not discussed frequently but it definitely requires a sober look.

I made analysis of world oil production and summary of cuts.

The link to my file is here:
https://www.dropbox.com/s/lewu9miqg5tdhkf/Oil%20cuts%20analysis.xlsx?dl=0

Note:
Production in my file is approx 74mb/d while often we hear a number of 93mb/d. Difference of +/-20mb/d is liquified nat gas products, non-conventional oil, and production of small producers (below 500kb/d). A third is coming from North America, another third from OPEC, and last third - from everyone else. But it is not important for this analysis. The production table shows us that a bit more than half of producers take part in cuts while others do not take part.

Looking at this data I see that:
1. Half of the world participating in cuts achieved approx 3% of world production cut - 2,300 mb/d
2. US production grew by 2,000mb/d from the moment of signing cuts agreement.
3. This is practically an offset. Rest is media excitement. US sits calm while benefiting from this agreement more than any other country.
4. Assuming nearly parity of cuts and US production growth any further growth is in question.

There no such thing as ‘fair price’ I agree with Saudi minister who said so. But there is no PRACTICAL ground for a big excitement either, numbers do not lie. I’ve been monitoring IEA and OPEC monthly reports for some time and when it comes to their balance of supply & demand projections they are (no wonder) always upward biased. Just take any past report, look at the projection and reconcile it versus results a few months after.

I am not going to make further price movement predictions. Imo market has been on steroids lately. How long this steroid boost will last – I do not know. But Swap Dealers (read – banks) have been short oil big time. Sooner or later they will get what they want.

The word 'manipulation' comes to my mind. A weak change in production and such a huge spike in price. But market takes no prisoners and there is no complains department to offer a shoulder to cry on.

GL&GT.

P.S. Today we shall see a big move after Trump announces his Iran deal decision at 2pm NY time. I expect him to re-impose sanctions on Iran. But even under sanctions Iran was allowed to sell its oil, a bit less but still they were selling it. And market knows that.

Messages In This Thread

OT: Oil
Re: OT: Oil
Re: OT: Oil (Joakim)
Re: OT: Oil (Tango)
Re: OT: Oil (Tango)
Re: OT: Oil (Tango)
Re: OT: Oil (Tango) (Joakim)