Running With the Bulls

Oil markets indices are up this morning following a day in which RBOB, heating oil and crude all finished lower.  Yesterday’s settles had crude down $0.31 / barrel to settle at $52.41 while the refined products RBOB and heating oil also finished lower by $0.0272 / gallon and $0.0163 / gallon to close at $1.4192 / gallon and $1.8922 / gallon respectively.  This morning the market has taken back those losses as bullish headlines are dominating the news.  To summarize:

  • Growing optimism that a government shutdown will be avoided
  • U.S. – China trade talks progressing
  • Continuing closure of parts of the Keystone pipeline which brings Canadian Oil to the U.S.
  • Additional OPEC production cuts being discussed
  • Sanctions on Iran and Venezuela

This morning, the Saudi Arabian Energy Minister announced that it would reduce crude production by over half a million more barrels than what it originally stated in the agreed upon OPEC production cut.  This is being done to drive up oil prices as the Kingdom continues to pursue economic change.

Of course, broader supply concerns still remain as U.S. oil production continues to rise which somewhat offsets the previously mentioned sanctions on Iran and Venezuela.  In addition, questions on whether the U.S. will grant more waivers to import Iranian oil are leaving markets guessing on the impact of that decision.  “We believe that oil is not pricing in supply-side risks lately as markets are currently focused on U.S. – China trade talks” JP Morgan said in a weekly note.

As of this writing, both RBOB and HO are up over $0.0200 / gallon.  Late this afternoon, the American Petroleum Institute will release its weekly inventory report followed tomorrow by the Energy Information Administration data.

https://www.cnbc.com/2019/02/12/bp-ceo-bob-dudley-warns-oil-traders-about-market-uncertainty.html

https://www.cnbc.com/2019/02/11/oil-markets-us-rig-count-us-china-trade-in-focus.html

https://oilprice.com/Energy/Crude-Oil/The-Biggest-Threat-To-Oil-Market-Stability.html

www.opis.com

www.intlfcstone.com

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