9 Mar 2015
Oil price stability looks fragile as output rises faster than demand – BBH
FXStreet (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, explains that the increasing oil output in US and with the OPEC (anticipated) means that the sideways trend for oil prices might be in jeopardy.
Key Quotes
“Oil prices fell from the middle of last year through mid- to late-January. They have been broadly sideways since.”
“The April light sweet futures contract has been largely confined to a $48-$55 range. The April Brent contract traded in a $55-$60 range in the first half of February and moved into a slightly higher range $58-$63.”
“This stability of prices still appear fragile as output in the US and OPEC continues to rise. US output rose 39k barrels a day last week to 9.32 mln barrels a day. US oil output has exceeded 9 mln barrels since last October.”
“A Bloomberg survey found expectations that OPEC output increase 163k barrels a day last month to 30.568 mln barrels a day. It would be the ninth month the OPEC surpassed its own quota.”
“In any event, output is still rising faster than demand. Between imports and domestic production, the US is accumulating about a little more than a million barrels a day in excess of its consumption.”
“Crude oil stocks rose 10.3 mln barrels latest period week according to the Department of Energy estimates on top of the 9.3 mln barrels the prior week.”
“The issue of storage capacity has become more salient for investors. US crude stocks reached 444.4 mln barrels last week, the highest for this time of year going back to the 1930s. However, the Energy Information Agency (part of the DOE) acknowledged that its estimate of supplies includes the oil sitting in pipelines and at well sites, not just what is being conventionally stored.”
Key Quotes
“Oil prices fell from the middle of last year through mid- to late-January. They have been broadly sideways since.”
“The April light sweet futures contract has been largely confined to a $48-$55 range. The April Brent contract traded in a $55-$60 range in the first half of February and moved into a slightly higher range $58-$63.”
“This stability of prices still appear fragile as output in the US and OPEC continues to rise. US output rose 39k barrels a day last week to 9.32 mln barrels a day. US oil output has exceeded 9 mln barrels since last October.”
“A Bloomberg survey found expectations that OPEC output increase 163k barrels a day last month to 30.568 mln barrels a day. It would be the ninth month the OPEC surpassed its own quota.”
“In any event, output is still rising faster than demand. Between imports and domestic production, the US is accumulating about a little more than a million barrels a day in excess of its consumption.”
“Crude oil stocks rose 10.3 mln barrels latest period week according to the Department of Energy estimates on top of the 9.3 mln barrels the prior week.”
“The issue of storage capacity has become more salient for investors. US crude stocks reached 444.4 mln barrels last week, the highest for this time of year going back to the 1930s. However, the Energy Information Agency (part of the DOE) acknowledged that its estimate of supplies includes the oil sitting in pipelines and at well sites, not just what is being conventionally stored.”