WTI $40.45 -87c, Brent $45.46 -$1.16, Diff $5.01 -47c, NG $2.68 -8c
Oil price
Oil closed sharply down again on Friday, the prices above showed a drop of $2.66 or 6.2% for WTI and $3.73 or 7.6% for Brent. Friday’s PMI data from China disappointed the market as did the US numbers, thoughts of a September rate rise in the US are receding although not certain, Friday’s Jackson Hole meeting should provide more and hopefully from Stanley Fischer who is the mechanic rather than the oily rag.
This morning things have got worse with markets falling dramatically, led by China for whom the bell apparently tolls, equities and commodities have fallen together and with the tide down it is possible to see who has shorts on, so to speak. In oil, things have not changed, the fundamentals are still weak and WTI is $38.94 and Brent $43.62 as I write and with the rig count showing a rise of two oil units last week and WTI net length down another 17% over the same period there is little sign of support. Labor Day is only two weeks hence and after that refineries will take less crude for a while, chances of any real draw in crude stocks are diminishing and Opec is in disarray.
It is this point that one should consider as a possible, only possible, area to grasp at a straw or two, with Iran saying at the weekend that an emergency Opec meeting might be ‘effective in stabilising the price’. So whilst the world wrestles with deflation and a serious lack of growth, demand falling even at current prices might lead to a face-saving act of goodwill from the Saudis should they wish to do so. It wouldn't help the strategy of regaining market share of course and there is no sign of production restraints from the US or Russia but if it looks serious enough to warrant such a meeting it may just happen. Those long positions at a five year low indicate that the market is a one way bet at the moment, despite the fundamentals being awful it may just be worth investigating what would happen if the Saudis called an emergency meeting and a lot of shorts had to be covered in a hurry….
San Leon Energy
On a day when there is red ink all over the market and in the oil sector especially, the sight…
