WTI $60.14 +$2.00, Brent $64.88 +$2.19, Diff $4.74 +19c, NG $2.85 +14c
Oil price
The rally in the oil price was impressive yesterday and continued overnight and in London this morning. Whilst there were a number of bullish factors at work such as the API stats (albeit they came after the US close) and the strong dollar it was also very much the case of believing what you want to as negative factors were brushed under the carpet.
So, the API inventory numbers were indeed positive with crude stocks falling by 6.7m barrels vs forecasts of less than 2m but in line with my comments yesterday where I expected a catch-up with last week’s EIA stats. Even more surprising, at least to the dim-witted aforementioned analysts, was the situation in gasoline where stocks fell another whopping 3.87m barrels versus their expectations of a rise…
The EIA are busy this week, yesterday I reported that they put US supply at 9.6m b/d and the rest of that report fed the bulls as they forecast falling US tight oil production of 93/- b/d in July making a possible cut of 209/- b/d on the quarter. In their STEO they actually dropped their price targets for this year and next due to non-Opec supply and the uncertainty of Iranian production. Elsewhere the Saudi Oil Ministry took the unusual step of justifying recent production numbers by saying that ‘the increase in the Kingdom’s production over the past three months is a result of market conditions, specifically increasing global demand and the needs of the KSA’s permanent clients, it is not designed to compensate for lower prices’.
Overall one must go with the market which has firmed again this morning by adding over a dollar to WTI and Brent. The bulls have the upper hand but the bears, who correctly point out that Opec is still, and will be for some time, producing so much that worldwide stocks are rising despite increased demand, will surely have their day in the sun before long. Finally the NOAA (National Oceanic and Atmospheric Administration in case you didn't know) have put out their prediction for the summer weather in the USA, a warmer time is predicted for the Shermans after a mild one last year and accordingly families will spend 4.8% more on electricity bills, mainly on air-conditioning.
Primeline Energy Holdings
For those of you brave enough to go with one of my strongest recommendations,…
